Guest ladycpa2 Posted September 18, 2007 Share Posted September 18, 2007 I have a client who failed their nondiscrimination deferral percentage test in their SARSEP for 2006 plan year. Do they have to refund the excess or can they make a QNEC to get the NHCE's percentage high enough they can pass? Any help would be greatly appreciated!! Link to comment Share on other sites More sharing options...
Guest ladycpa2 Posted September 18, 2007 Share Posted September 18, 2007 I have a client who failed their nondiscrimination deferral percentage test in their SARSEP for 2006 plan year. Do they have to refund the excess or can they make a QNEC to get the NHCE's percentage high enough they can pass? Any help would be greatly appreciated!! Once, I looked at EPCRS Rev. Proc. 2006-27, I believe under EPCRS the SARSEP could use a QNEC to satisfy the failed deferral percentage test. A couple of other questions now, 1)If they use the QNEC, is the employer still subject to a 10% excise for not notifying the employee of the excess? 2) If they use the QNEC, that would not be considered a nondeductible contribution for the employer subject to the 10% excise tax as long as they are within their deduction limit with the QNEC right? and 3) Would the HCE be subject to the 6% excise tax on nondeductible IRA contributions? This is messy! Thanks for any assistance! Link to comment Share on other sites More sharing options...
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