Sign in to follow this  
Guest tjt169

One to One Correction Method

Recommended Posts

Guest tjt169   
Guest tjt169

Plan failed 2005 ADP testing and we are now just correcting it. Client has chosen the one-to-one method as their correction method.

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!!

Share this post

Link to post
Share on other sites
Tom Poje    218

while example 1 of the same section doesn't discuss 'negative' earnings, I'd say it is implied.(but then what do I know)

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

Share this post

Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this