TMcfall Posted August 12, 2021 Share Posted August 12, 2021 A client recently acquired a number of employees but never gave the employees the opportunity to enroll and begin deferrals. The client is looking for a solution to remedy this with the employees as well as keeping the plan compliant. I know that a QNEC is owed for the missed opportunity and the employer is responsible for 25% of employee deferrals and 100% of the Safe Harbor Match. My question is since the employees were never notified or given the opportunity to elect a deferral percentage. What would you take 25% of? Link to comment Share on other sites More sharing options...
Bri Posted August 12, 2021 Share Posted August 12, 2021 Doesn't EPCRS say to assume the highest deferral rate that gets matched at 100% (so 3% under a SH basic match, or possibly 4% if enhanced.) (Haven't dove in deep to the new version.) Link to comment Share on other sites More sharing options...
BG5150 Posted August 12, 2021 Share Posted August 12, 2021 53 minutes ago, Bri said: Doesn't EPCRS say to assume the highest deferral rate that gets matched at 100% (so 3% under a SH basic match, or possibly 4% if enhanced.) (d)(i) If the employee was not provided the opportunity to elect and make elective deferrals (other than designated Roth contributions) to a safe harbor § 401(k) plan that uses a rate of matching contributions to satisfy the safe harbor requirements of § 401(k)(12), then the missed deferral is deemed equal to the greater of 3 percent of compensation or the maximum deferral percentage for which the employer provides a matching contribution rate that is at least as favorable as 100 percent of the elective deferral made by the employee. AND The required QNEC on behalf of the excluded employee is equal to (i) 50 percent of the missed deferral, plus (ii) either (A) an amount equal to the contribution that would have been required as a matching contribution based on the missed deferral in the case of a safe harbor § 401(k) plan that uses a rate of matching contributions to satisfy the safe harbor requirements of § 401(k)(12)... QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left. Link to comment Share on other sites More sharing options...
Kevin C Posted August 12, 2021 Share Posted August 12, 2021 How long were they improperly excluded? Rev. Proc. 2021-30 Appendix A .05 (9) has safe harbor correction methods that apply if you follow the requirements listed for (a) exclusions not exceeding 3 months and (b) exclusions not extending beyond the SCP correction period for significant failures (which was extended). Link to comment Share on other sites More sharing options...
Patricia Neal Jensen Posted August 16, 2021 Share Posted August 16, 2021 Of "Compensation" as defined by the Plan Document. Patricia Neal Jensen, JD Vice President and Nonprofit Practice Leader |Future Plan, an Ascensus Company 21031 Ventura Blvd., 12th Floor Woodland Hills, CA 91364 E patricia.jensen@futureplan.com P 949-325-6727 Link to comment Share on other sites More sharing options...
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