Failed ACP Match Refunds

Hi,

A client failed the ACP Test. When calculating the refunds, the system is also calculating match forfeiture refunds as well. All of the people receiving refunds are 100% vested.

Can someone explain to me what is happening? 

Is it related (or "orphan") match, perhaps?

An example is a plan that matches 50% on the first 6%.  If your ADP test refunds brought someone's deferrals down below 6%, then they don't get to have the match associated with the refunded 401(k).

That's different than an ACP refund, though, where you're supposed to apply the vesting percentage.  In this case it's a forfeiture meant to prevent the HCE from having a net higher rate of match than anyone else.

What if they are catch-up eligible and the plan allows match on catch-up?  How would you determine the related match in this case?

I don't think there's a difference in that case.  If the match formula applies to regular plus catchup deferrals, then you still determine if there's "related" match on the overall amount, not the amount that was the net number in the ADP test itself.