How does RPG calculate allocable income for ADP/ACP refunds as of the last day of the plan year?
1. Add together the participant’s beginning of the year balance in the source of money being corrected plus the total contribution for the year in that source to get an earnings basis.
2. Divide the participant’s total gain in that source by the participant’s earnings basis to get an earnings ratio.
3. Multiply the earnings ratio by the amount of the corrective distribution to get the amount of gain (loss) for the plan year that needs to be returned with the excess.