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Client has provided employees with bonuses at year-end for many years. While the plan document states that W2 compensation is eligible plan compensation, the client did not withhold employee deferrals from the bonus pays as they would with any normal payroll. Instead, because employee feedback was that most employees did not want employee deferrals withheld, the client began communicating that employee deferrals would not be withheld unless the employee completed an election form specific to the bonus pay. Each year, only about 3% of employees completed the election form. Would a QNEC be required for employees that did not have employee deferrals withheld from the bonus pay? To your knowledge, how far back would the corrections need to go? Thank you.
