Matching Contribution Timing

[mjf06241972]

A client provided bad compensation data on the plan for 2019 and we are realizing adjustments need to be made.  They also switched carriers and are in blackout until 2021.  Can they still make the adjustment matching contributions.  Document is set up for annual matching contributions and now need adjustments (additional matching contributions) that most likely will not happen utnil 2021.

[BG5150]

Put the additional match in a bank account in the plan's name (under the trust id #).  When the plan comes out of blackout, put the funds in participant accounts and adjust for earnings.  Check the 415 rules for when the contribution will be considered an annual addition for the participant.  I'm not sure if it would be 2020 (when the funds left the ER and put into the adjunct trust, or bank, account) or 2021 when they actually gets invested in the accounts.  Really only relevant if anyone is close to maxing their 415.

[MWeddell]

I agree with BG5150.

The uncommonly late matching contributions affects 415 and 404 timing.

If the match is made to the trust more than 12 months after the end of the plan year that contains the date as of which the match is allocated, then the match is not included in the ACP test per Treas. Reg. Section 1.401(m)-2(a)(4)(iii)(C).  Before the Dec. 2004 revision to the 401(k) / 401(m) regulations, the regulations proceeded to clarify that one had to test the match as if it were an employer nonelective contribution subject to a 401(a)(4) test, not to be tested together with any other contributions.