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QNEC Optional?


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One of the plans we oversee had an NHCE who changed their deferral % from 6% to 10% in February. Somehow this got registered as 0% and for two pay periods, nothing was deducted. This should qualify under the "brief exclusion" rules.

The participant will end up getting the full match for the year because of her current 10% election and the fact that the sponsor does a true-up. Because this will qualify for "brief exclusion"  treatment, the employer is not required to make up the missed deferrals. However, the question has been asked - what if they WANT to make them up, even if not required to do so? Can they do so electively? 

Thanks,

Dog

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A correction using a method in Appendix A or B of the EPCRS Rev. Proc. is deemed to be reasonable and appropriate.  Other correction methods may also be reasonable and appropriate.  [Rev. Proc. 2018-52 6.02(2)].  They are not required to use the brief exclusion method.  But, keep in mind that there is a requirement in 6.02(3) that the correction method used must be applied consistently for the plan year. So, yes, they can do a more generous correction as long as it is applied consistently for the plan year.

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