Missed Deferrals on Bonus Comp

[12AX7]

Plan definition of comp does not exclude bonuses. Employer missed deferring on bonuses for a recent payroll. Rev. Proc. 2008-50 does not appear to directly address this situation, unless I somehow missed it.

It seems that one method of correction would be to have the Employer make a QNEC for 1/2 of the missed deferral , then make the SH Match based on this amount? Am I missing anything? Plan Document does not address this issue. Perhaps just taking the missed deferral from the next payroll?

I appreciate any suggestions.

[401king]

You are aright on the 50% QNEC, but you do not need to then match the QNEC. http://www.irs.gov/retirement/article/0,,id=212043,00.html

[Kevin C]

The match portion of the correction for a failure to implement a deferral election is addressed in Rev. Proc. 2008-50, Appendix A .05(5)©. If the participant would have received additional match if the deferrals had been done correctly, then the additional match they would have received is part of the correction.

There are rules in the Rev. Proc. for short periods of exclusion, but I don't see any mention of taking the missed deferrals from a later paycheck.

[BG5150]

There are rules in the Rev. Proc. for short periods of exclusion, but I don't see any mention of taking the missed deferrals from a later paycheck.

For short periods:

An employer is not required to make a corrective contribution

with respect to elective deferrals... but is required to

make a corrective contribution with respect to any matching contributions, as provided in

section 2.02(1)(a)(ii)(D) for an employee for a plan year if the employee has been

provided the opportunity to make elective deferrals...

under the plan for a period of at least the last 9 months in that plan year and during that

period the employee had the opportunity to make elective deferrals ...

in an amount not less than the maximum amount that would have been

permitted if no failure had occurred.

There must be at least 9 months left in the plan year for the participant to make up the difference. (But the ER still has to make the match)

[QDROphile]

Is a separate election required/allowed for the bonus or does the regular election apply to it? In other wods, what was missed? Was it some independent opportunity or was it just a payroll oversight?

[12AX7]

There was not a separate election to not defer on the bonus payroll. It was the payroll company that made the error. I understand and agree on the safe harbor match portion. Thanks for the responses.