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Showing results for tags 'Improperly excluded employee'.
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A small plan improperly excluded an eligible employee who was an NHCE. He was the only NHCE; all other employees and participants are HCEs. When calculating the missed deferral oppertunity under EPCRS, Appendix A, .05(2)(b) indicates that the missed deferral opportunity is determined by multiplying the ADP for the year of exclusion for the employee's group in the plan by the employee's compensation for the year of exclusion. But in this case there isn't anyone else in the employee's group because he is the only NHCE, so how do you determine what the ADP for his group would have been? Do you assume 3%, since that seems to be a favorite assumption for other portions of Appendix A? It surely cannot be zero....