Plan provides that if you fail ADP, elective deferrals are returned and the related match is forfeited. Under PPA, we eliminate gap period income on the excess elective deferrals; how do we measure income on the forfeited match? Do we eliminate gap period income on the match as well? These are not matching contributions that fail ACP; this is the match on amounts that fail ADP.

I suggest that since the match I think you are discussing is a match that can't be allocated, allocation of earnings is not applicable. This is analogous to a match that would cause IRC 415 to be violated. Application of an earnings adjustment is not applicable, as I understand. This is becuase the match allocation should simply not be made.

Is your question related to monies that were deposited and need to be remove from an individual's account?