I have a client with a 401(k) Plan. The match is based on 50% of the first 5% deferred. Eligibility is 3 months and age 21. Entry is 1st of the month.

Employee is hired 5/1/03. His entry date would be 8/1/03.

He doesn't defer until late '04. From deferral election to year end, he defers $8,700 on pay of $15,000. Full year pay is $58,000.

How would you calculate the match?

What does the document say about allocation timing and compensation? Is the match allocated by payroll, at year-end or other (e.g. quarterly)?

If the document says it's allocated by payroll, you would base it on 15k comp, if it is allocated at year-end, it might be based on full year comp or even date-of-participation compensation.

The Compensation Computation Period is the Plan Year. The documents says "True-Up to the current pay period for the Plan Year to date."

Also need definition of 'Compensation'. Does it say 'while a participant in that portion of the plan', or does it say 'plan year' and nothing else.

That will govern the measuring pay - whether from 5/1 or from 8/1.

THen you see how the match is applied.

Just to clarify, the participant completed eligibilty in 2003. He made the deferral in late 2004. Plan year is calendar.