Match refunded or forfeited in this case

[BG5150]

Plan is prior year tested.  Last year, no NCHE contribs, no HCE.  2016 1 HCE and some NHCEs.

HCE is over 50, deferred $2,500.  ADP test fails, but no refund, re-characterized as catch-up.

He received a $600 match.  ACP test obviously fails.

BUT:  do I forfeit the match b/c the ADP test failed and all the match is attributable to deferrals anathema to the ADP test?  Or, do I refund the money, as the ACP test fails?

[Tom Poje]

does the plan document say you match catch-up?

[BG5150]

Yes.

[CuseFan]

then the match is permitted, but still fails ACP and so must be forfeited to extent not vested and distributed to extent vested, right Tom?

[Tom Poje]

that is my understanding. if there had been a match in prior years (e.g. not last year obviously) then there are some other possibilities.

lets say there was a prior match, and the person's match balance is 2000 and he is 60% vested.

then his vested balance is 1200 and he could receive all 600 of the match as long as his next statement would be

match balance 1400

60% vested

but vested balance is 600, which, 600 / 1400 is less than 43%.