APRSC

[Guest JB2]

A 401(k)plan had an employee listed as eligible in the year after he should have been included (should have been included in 1997, was included in 1998). The only contributions for 1997 and 1998 were salary deferrals (no match, no top-heavy, etc). The employee did to defer in 1998.

How would the employer self-correct? Does he offer the employee the option of making a 1997 contribution?

[Guest bswift]

You might want to take a look at Rev. Proc. 98-22, appendix A.05, which states that "if the employee should have been eligible to make an elective deferral contribution under a [401(k) plan], the employer must make a QNC to the plan on hehalf of the employee that is equal to the actual deferral percentage for the employee's group (either highly compensated or nonhighly compensated)." Good Luck.

[Guest derek]

Also, I think "lost" earnings based on the activity in the plan should be contributed. Some flexibility, depending on whether the calculation is based on the accepted methodologies stated in the Rev.Proc. versus the methods allowed under VCR, Walk-in CAP, etc.