Clarification of SVP Correction Method for Profit-Sharing Plans Sample Clauses

Clarification of SVP Correction Method for Profit-Sharing Plans. To correct for the exclusion of an eligible employee from nonelective contributions in a profit-sharing or stock bonus plan under the SVP correction method, an allocation amount is determined for each excluded employee on the same basis as the allocation amounts were determined for the other employees under the plan's allocation formula (e.g., the same ratio of allocation to compensation), taking into account all of the employee's relevant factors (e.g., compensation) under that formula for that year. The employer makes a corrective contribution on behalf of the excluded employee that is equal to the allocation amount for the excluded employee. The corrective contribution is adjusted for earnings. If, as a result of excluding an employee, an amount was improperly allocated to the account balance of an eligible employee who shared in the original allocation of the nonelective contribution, no reduction is made to the account balance of the employee who shared in the original allocation on account of the improper allocation. (See Example 8.)
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Clarification of SVP Correction Method for Profit-Sharing Plans. To cor- rect for the exclusion of an eligible em- ployee from nonelective contributions in a profit-sharing or stock bonus plan under the SVP correction method, an allocation amount is determined for each excluded employee on the same basis as the alloca- tion amounts were determined for the other employees under the plan’s alloca- tion formula (e.g., the same ratio of allo- cation to compensation), taking into ac- count all of the employee’s relevant factors (e.g., compensation) under that formula for that year. The employer makes a corrective contribution on behalf of the excluded employee that is equal to the allocation amount for the excluded employee. The corrective contribution is adjusted for earnings. If, as a result of ex- cluding an employee, an amount was im- properly allocated to the account balance of an eligible employee who shared in the original allocation of the nonelective con- tribution, no reduction is made to the ac- count balance of the employee who shared in the original allocation on ac- count of the improper allocation. (See Example 8.)
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