Excess elective deferrals shall be adjusted for any income or loss. For taxable years beginning on or after January 1, 2008, the income or loss allocable to excess elective deferrals allocated to each participant is the income or loss allocable to the participant's elective deferral account for the taxable year multiplied by a fraction, the numerator of which is such participant's excess elective deferrals for the year and the denominator is the participant's account balance attributable to elective deferrals without regard to any income or loss occurring during such taxable year. Effective solely for the taxable year beginning on or after January 1, 2007, and to the extent the excess elective deferrals were credited with gain or loss as of an accounting date within the gap period (i.e., the period after the close of the taxable year and prior to the distribution), allocable income or loss also includes 10% of the amount determined under the preceding sentence multiplied by the number of whole calendar months between the end of the participant’s taxable year and the date of distribution, counting the month of distribution if distribution occurred after the 15th of such month.

The amount determined by multiplying the income or loss allocable to the Participant’s elective deferrals for the taxable year and the gap period by a fraction, the numerator of which is the Participant’s Excess Deferrals for the taxable year and the denominator of which is the Participant’s elective deferral account balance as of the beginning of the Participant’s taxable year plus any elective deferrals allocated to the Participant during the taxable year and the gap period.

Determination of Income or Loss – Excess contributions shall be adjusted for any income or loss. For plan years beginning on or after January 1, 2008, the income or loss allocable to excess contributions allocated to each participant is the income or loss allocable to the participant's elective deferral account(s) (and, if applicable, the qualified nonelective contribution account or the qualified employer matching contribution account or both) for the plan year multiplied by a fraction, the numerator of which is such participant's excess contributions for the year and the denominator is the participant's account balance(s) attributable to elective deferrals (and qualified nonelective contributions or qualified matching contributions, or both, if any of such contributions are included in the ADP test) without regard to any income or loss occurring during such plan year. Effective solely for the plan year beginning on or after January 1, 2006 and the plan year beginning on or after January 1, 2007 and to the extent the excess contributions were credited with gain or loss as of an accounting date within the gap period (i.e., the period after the close of the plan year and prior to the distribution), allocable income or loss also includes 10% of the amount determined under the preceding sentence multiplied by the number of whole calendar months between the end of the plan year and the date of distribution, counting the month of distribution if distribution occured after the 15th of such month.