I have a new situation and I am not sure how to correct the error. A company started a new safe harbor 401k plan in 2015. Employees completed forms and elected to defer. The payroll company entered the employees' elections in their payroll system, but coded them as "safe harbor". The employer used the payroll reports to submit the "deferrals" to the plan each pay period. The employer also submitted the safe harbor match each pay period based on the "deferrals". The deferrals were never withheld from the employees' pay. The employees' W2's show no deferrals. The employer technically corrected the "missed deferral" each pay period during the year. There were no lost earnings because their "deferrals" were deposited each pay. They also received the correct match each pay. The employer funded the deferral for all of the employees for the entire year. Should the "deferrals" be coded as QNEC? Has anyone ever have this situation before? Does anyone know what the proper correction should be?
