Yet Another Rookie Question

[Guest GreenERISA]

Hi again,

I have another question re: SCP.

Rev Proc 2008-50, Section .05(d) under Appendix A states provides that if an employee was not provided the opportunity to elect and make elect deferrals...to a safe harbor 401(k) plan that uses a rate of matching contributions to satisfy the safe harbor requirement, then the missed deferral is equal to the greater of 3% of compensation or the maximum deferral percentage for which the employer provides a matching contribution rate that is at least as favorable as 100% of the elctive deferral made by the employee...the required QNEC is 50% of the missed deferral + the matching contribution.

My client's SH match is 100% up to 3%, then 50% of anything >3% and not over 5% of pay. My confusion lies in the bolded text above-do I only look at the portion of the match that is matched at 100%, or do I take the 50% into consideration as well?

The associate that I replaced had figured the QNEC to be 1.5% (he used the 3% of comp as the "greater of" number, but I'm thinking that the match rate is higher if we do not disregard the 50% on the 4% and 5%, as provided for in their matching contribution formula). If my thoughts are right, oy vey, would the calc for QNEC then be 3% + 1% (50% of 4 & 5)? I.e., 3% (for the 100% match) then 50% of anything over 3 but not more than 5, so 2 would then become the 1%, and then I take half to get to a blanket 2% corrective contribution for those who were affected but will remain under the 402(g)?

Advice from a seasoned pro for a green rookie? Thanks in advance.

[K2retire]

With your formula, it takes a 5% deferral to get the maximum 4% match. My understanding pf the Rev Proc is that the missed amount the employer would make us is 2 1/2% (half of 5% deferrals) plus the 4% match.

[Guest GreenERISA]

With your formula, it takes a 5% deferral to get the maximum 4% match. My understanding pf the Rev Proc is that the missed amount the employer would make us is 2 1/2% (half of 5% deferrals) plus the 4% match.

Nevermind, I found the answer-it is in Appendix B-under .02(B)(1). It appears it is only the amount of the match that is matched at 100% or more that is taken into consideration.