Excluding Statutorily Excludable EEs from QNECs

[Guest MAWalsh]

A new 401(k) has an Age 21/Year of Service eligibility that was waived for anyone who was employed on March 31 -- the effective date of the plan. The plan has failed its ADP testing (testing statutorily excluded employees separately).

If the Employer opts to correct w/QNEC, are only ee's w/year of svc & age 21 eligible? How about if Employer opts to only give QNEC to ee's who deferred (a document option)? The document does not address this issue. It only definitively excludes ee's not employed at the end of the plan year. (FYI - It is a Corbel Volume Submitter.) Having to include the excludable ee's will obviously drive up the total cost of the QNEC.

On a related note - what is the current word on a bottoms-up QNEC? Legal today?

[Guest km6719]

If you are eligible to participate you are eligible to receive the QNEC. Bottom-up's are legal for now. It will probably be much more cost effective for the client to provide the bottom-up QNEC.