Guest mmc Posted February 12, 2004 Posted February 12, 2004 A few employees were not notified of their eligibility to participate in the 401(k) plan for 2002 and 2003. The correction is to contribute QNEC's equal to the ADP for those years. How are earnings calculated?
Alf Posted February 12, 2004 Posted February 12, 2004 Conservative approach if they are NHCEs is to give them the highest return of available funds. We generally have seen a weighted average of all funds used because every plan has at least one super-performing fund each quarter. QUESTION: What if you have a safeharbor plan and don't run ADP tests. Can you just use actual ADP for the NHCE or HCE group?
Guest mmc Posted February 12, 2004 Posted February 12, 2004 This is a safe harbor 401(k) and we went back and did the ADP test to calculate the ADP for the NHCE.
Brian Gallagher Posted February 12, 2004 Posted February 12, 2004 Correction methods (including determining account performance) can be found in Revenue Procedure 2003-44. Here's the site: http://www.irs.gov/retirement/article/0,,id=112983,00.html Remember: two wrongs don't make a right, but three rights make a left.
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