FAQ 52: Matching--Calculating the contributions on total deferrals before catchup in ADP test

Problem: We are having a problem with the deferrals that are being considered when we are requested to do a match contribution calculation or match forfeiture allocation after the ADP/ACP testing has already been finalized and was a failure. The calculation/forfeiture allocation is not looking at those deferrals that were reclassified as catchup, it is only looking at the amount not considered catchup contributions. However, most of our clients calculate match and allow for match forfeitures on the catch up contributions.

Solution: In order to calculate matching contributions on total deferrals, you must run your matching calculations prior to running any tests that determine catch-up contributions. At this point, you would have to restore your contributions, calculate your matching contributions and then rerun your ADP/ACP tests to redetermine catch-up contributions.