Omission of Eligible Employee

[MarZDoates]

Eligible employee was not given the opportunity to make salary reduction contributions to 401(k) in January, 2005. It is my understanding that the employer must make a QNEC in an amount equal to the average deferral for the NHCEs. (She is also an NHCE). Is that correct?

Also, is there anything we need to disclose on the 5500 about the omission?

Thanks.

[Guest ronald mexico]

when was the ee given the ability to defer?

if i remember right, if it was caught & they had 9 or 10 months of the year to defer, there is no er contribution required.

[MarZDoates]

She was rehired in January. The omission was not discovered until October.

Do you have a cite that I can reference? Thanks.

[Guest ronald mexico]

rev proc 2002-47, appendix B section 2

it is 9 months they had to be able defer during the plan yr (special rule for brief exclusion)

[J. Bringhurst]

Rev. Proc. 2003-44 is the most recent EPCRS out there...addresses this issue specifically.