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Showing results for tags '11 g amendment'.
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It was discovered that the coverage testing has been done incorrectly for several years (more than 5). Plan fails coverage and there is no fail-safe language so we are proposing an 11(g) amendment and to file the correction under VCP. The TPA's suggestion is to allocate a QNEC contributions to the lowest paid participants sufficient to pass the AVB. While QNEC for ADP testing needs to be limited to no more than 5% or twice the representative rate, there doesn't appear to be any limitations for purposes of the QNEC for ABT. Tres Reg 1.401(a)(4)-11(g)(vii) states that the QNEC should be equal to the NHCE's compensation multiplied by the ADP and/or the ACP so I'm afraid that allocating a QNEC contribution to the lowest paid employees might be considered discriminatory by the IRS. It does not appear to me that they would pass the reasonable classification test. Is it permitted to target the QNEC allocation? Is there any guidance on how to allocate the QNEC?
