EE newly eligible... not enrolled

[K-t-F]

Taking over a SH 401.... Just told by the financial advisor go-between that the client had an EE that was eligible to enter and defer on 1/1 but was not enrolled. The EE as a result ended up missing out on the ability to defer during the period from 1/1 to now.... and also missed out on the SH match.

Is EE entitled to make up the missed deferrals and receive the missed SH match? (I would think so)

Are there any other issues that I should be concerned with?

I appreciate the help!

[Archimage]

The company must make a QNEC in the amount of the average ADP of the NHCEs (assuming he is an NHCE) and another QNEC for the average ACP of the NHCEs.

You would only base this on the period in which the participant was excluded.

[K-t-F]

To the participant that was overlooked? In essence the company is going to make the deferral for the participant and match it as well?

[Guest quinn the car fixer]

isn't there an exception if the exclusionary period was "brief" ? i think if the ee was allowed to defer for at least 9 months no action is needed(?)

[Archimage]

PATA, that is correct.

Quinn, you are correct as well, except in this situation PATA said "1/1 until now" which is more than 3 months of the year.

[K-t-F]

Is that the standard procedure.. if a plan sponsor fails to enroll an eligible EE the plan sponsor is then liable for the missed deferral and match (the missed EE will receive the average of each) even if the EE decides once enrolled not to defer?

[Archimage]

Yes, that is the correction method as cited in Appendix B of EPCRS.

[FJR]

Wouldn't you want to make sure you first understand what is meant by "was not enrolled"? I wouldn't be so quick to give contributions away until you know the facts first. Did the participant have the opportunity to enroll, but did not do anything? That could be different.