Leaderboard

She was not a US citizen, she was working remotely while living outside the US. She has since moved to the US, and is now a W2 employee.

I think that means that the you're okay because the correction amount is part of the overall total. But that's presuming you're saying this was a taxable cash payment. If the HCE did a rollover then the plan has still satisfied the requirement to distribute the corrective excess, but it would result in an ineligible rollover contribution.

They have the service for the sponsor but had been previously ineligible because they were a nonresident alien with no US source income? Sounds like they're likely immediately eligible upon the switch to an eligible class of employees.

Had a situation just like this not too long ago and our actuary insisted that the 110% rule still applies.

Does the Plan Document currently not allow for match or has the company simply not made matching contributions in the past? Because I think the two may lead to different results. If the plan currently allows for a discretionary match but they haven't made one, the plan probably already has a testing method (current or prior) and I don't think you can used the assumed 3% prior year rule. If the plan doesn't currently allow for matching contributions and you are amending that in with the after tax, then I agree if you elect prior year testing, the first year NHCE ACP is assumed to be 3%.

I agree. If all HCEs, they can do whatever they want, assuming no 415 issues. This also assumes that the plan has never benefit any NHCEs and there are no NHCEs who are being excluded from the plan.

I agree with Lou. I also suggest that you reach out to the PBGC and ask them how to proceed. I have found them to be generally responsive and very willing to work with you.