Common use of Reallocation Correction Method Clause in Contracts

Reallocation Correction Method. In addition to the contribution correction method, in a defined contribution plan under which forfeitures of account balances are reallocated among the account balances of the other eligible employees in the plan, a failure to apply the proper vesting per- centage to an employee’s account balance which results in forfeiture of too large a portion of the employee’s account balance may be corrected under the reallocation correction method set forth in this para- graph. A corrective reallocation is made in accordance with the reallocation correction method set forth in section 2.02(2)(a)(iii), subject to the limitations set forth in section 2.02(2)(a)(iii)(F). In applying section 2.02(2)(a)(iii)(B), the account balance of the employee who incurred the improper forfeiture is increased by an amount equal to the amount of the improper forfeiture and the amount is adjusted for earnings. In applying section 2.02(2)(a)(iii)(C)(1), the account balance of each employee who shared in the allocation of the improper for- feiture is reduced by the amount of the im- proper forfeiture that was allocated to that employee’s account. The earnings adjust- ments for the account balances that are being reduced are determined in accor- dance with sections 2.02(2)(a)(iii)(C)(2) and (3) and the reductions after adjustments for earnings are limited in accordance with section 2.02(2)(a)(iii)(C)(4). In accordance with section 2.02(2)(a)(iii)(D), if the aggre- gate amount of the increases exceeds the aggregate amount of the reductions, the employer makes a corrective contribution to the plan for the amount of the excess. In accordance with section 2.02(2)(a)(iii)(D), if the aggregate amount of the reductions exceeds the aggregate amount of the in- creases, then the amount by which each employee’s account balance is reduced is decreased on a pro rata basis. (See Exam- ple 12.)

Reallocation Correction Method. In addition to the contribution correction method, in a defined contribution plan under which forfeitures of account balances are reallocated among the account balances of the other eligible employees in the plan, a failure to apply the proper vesting per- centage percentage to an employee’s account balance which results in forfeiture of too large a portion of the employee’s account balance may be corrected under the reallocation correction method set forth in this para- graphparagraph. A corrective reallocation is made in accordance with the reallocation correction method set forth in section 2.02(2)(a)(iii4.02(2)(a)(iii), subject to the limitations set forth in section 2.02(2)(a)(iii)(F4.02(2)(a)(iii)(F). In applying section 2.02(2)(a)(iii)(B4.02(2)(a)(iii)(B), the account balance of the employee who incurred the improper forfeiture is increased by an amount equal to the amount of the improper forfeiture and the amount is adjusted for earnings. In applying section 2.02(2)(a)(iii)(C)(14.02(2)(a)(iii)(C)(1), the account balance of each employee who shared in the allocation of the improper for- feiture forfeiture is reduced by the amount of the im- proper improper forfeiture that was allocated to that employee’s account. The earnings adjust- ments adjustments for the account balances that are being reduced are determined in accor- dance accordance with sections 2.02(2)(a)(iii)(C)(24.02(2)(a)(iii)(C)(2) and (3) and the reductions after adjustments for earnings are limited in accordance with section 2.02(2)(a)(iii)(C)(4). In accordance with section 2.02(2)(a)(iii)(D), if the aggre- gate amount of the increases exceeds the aggregate amount of the reductions, the employer makes a corrective contribution to the plan for the amount of the excess. In accordance with section 2.02(2)(a)(iii)(D), if the aggregate amount of the reductions exceeds the aggregate amount of the in- creases, then the amount by which each employee’s account balance is reduced is decreased on a pro rata basis. (See Exam- ple 12.)and