Contribution Withdrawal

My plan year end is 12/31/2024 and having Safe Harbor match.

One employee is deferred and received the SH Match on pay roll basis. He is terminated in between on 6/25/2024 and withdrawn all the account balance.

My doubt is, whether the employee's deferral and SH Match contribution should be included in testing or not for 2024 plan year?. 

If it is included in the testing and that employee is HCE and having refund, how to proceed with the distribution of excess amount? Already the employee is doesn't have any account balance, then how to proceed the distribution?

What testing would cause a refund to the HCE if the plan is safe harbor?

SH match with employer match with allocation condition and one NHCE is having deferral and SH Match but withdrawn all account balance before the end of plan year. Whether that contribution should be included in testing for 2024 plan year?

Seems like the facts changed between your two messages.

SH Match can't have an allocation condition. Are you saying there is both SH match and discretionary match? I'm confused by your fact pattern.

And anyway, if there really was a withdrawal due from the ACP test, and the HCE's already been paid, then the Plan Administrator needs to adjust the Forms 1099-R to indicate one amount paid as a corrective distribution, separate from the rest.  And the usual "gotta get it out of the IRA if that's where it's already gone" caveats.

On 1/12/2025 at 9:46 PM, TH 401k said:

Whether that contribution should be included in testing for 2024 plan year?

Yes. Simple one to be honest. Just because a participant takes a mid-year distribution doesn't exempt them from being in testing.