missed deferrals

[K2retire]

Here's an odd twist on a common problem. A large plan with automatic enrollment provisions relies on a file feed from the recordkeeper to adjust payroll withholding. Due to an error in the file feed, one HCE's deferrals were reset to zero in the middle of 2010. This was not noticed until February of 2012. The recordkeeper is willing to fund the QNEC for their error.

The plan failed the ADP test in 2010. Giving this HCE an additional amount potentially means that 8-10 other people should have gotten larger refunds. Because it is more than 12 months after the end of the year, would that trigger the need for a one to one correction?

The election was for a specific dollar amount. For 2012 the participant has more than 9 months to make up the missed amount. Is a correction needed?