One to One Correction Method
Posted 08 July 2010 - 09:40 AM
Total refunds due are $10,000.
Employee A is due a $2,000 refund.
Employee B is due a $3,000 refund.
Employee C is due a $5,000 refund.
Earnings are calculated and
Employee A refund is $2,200 ($200 earnings)
Employee B refund is $3,500 ($500 earnings)
Employee C refund is $4,700 (-$300 in losses)
Now we have to calculate how much the QNEC should be. In Appendix B - Section 2.01(1)(b) it says that the same dollar amount (adjusted for earnings) is contributed to the plan.
So do you think it should be $10,700 (only taking into consideration the positive earnings) or $10,400 (netting all earnings)?
After reading in the EPCRS, Appendix B - Section 2.01(1)(b)(IV)(A), it says that the employer makes a contribution to the plan that is equal to the aggregate amounts distributed. I think that means we could net out the negative earnings and the QNEC would be for $10,400.
Also, if all three had negative earnings, could the QNEC be less than the $10,000?
Any other thougts?
Thanks in advance!!
Posted 13 July 2010 - 02:01 PM
the correction method simply says earnings - which could be positive or negative.
actually see 6.02(4)(e) which for other corrections says ...... earnings (including losses)
Edited by Tom Poje, 13 July 2010 - 02:01 PM.