Inclusion of participant prior to entry date.

[Lori H]

2 NHCEs met eligibility but entered the plan before the entry date. The total deferred was less than $300. I know in the past EPCRS stated you had to amend the plan, which seems ridiculous since amending the plan could potentially cause the plan to include other NHCE's to receive QNECS for missed deferral opportunities.

Am I mistaken that you can now refund the ineligible deferral and it becomes taxable to the participant in the plan year it was distributed?

[Lou S.]

I think you still have to amend, but I don't think it needs to trigger a QNECs for other NHCEs.

Though it is possible I missed an EPCRS change on this. The IRS Fix-it guide (updated July, 2014) indicates you can still amend under SCP but need to submit the amendment in the next DL cycle and identify it separately. I'm not sure how you do that on pre-approved plans where they no longer accept DL apps.

[Lori H]

Yea it's a mystery to me. It's a prototype plan. it's not a lot of money, but still.

[John Feldt ERPA CPC QPA]

The amendment could just name the names of the 2 NHCEs to avoid the QNEC issue. If you provide an SMM, you can provide it to just the two affected individuals.

As to the determination letter, look at Rev. Proc. 2013-12, Section 5.01(4)(b):

(4) Favorable Letter.

The term "Favorable Letter" means, in the case of a Qualified Plan, a current favorable determination letter for an individually designed plan (including a volume submitter plan that is not identical to an approved volume submitter plan), a current favorable opinion letter for a Plan Sponsor that has adopted a master or prototype plan (standardized or nonstandardized), or a current favorable advisory letter and certification that the Plan Sponsor has adopted a plan that is identical to an approved volume submitter plan. A plan has a current favorable determination letter, opinion letter, or advisory letter if (a), (b), or © below is satisfied:

(a) The plan has a favorable determination letter, opinion letter, or advisory letter that considers the law changes incorporated in the Plan Sponsor’s most recently expired remedial amendment cycle determined under the provisions of Rev. Proc. 2007-44.

(b) The plan is initially adopted or effective after December 31, 2001, and the Plan Sponsor timely submits an application for a determination letter or adopts an approved master or prototype plan or volume submitter plan within the plan’s remedial amendment period under § 401(b).

[Lori H]

THANK YOU kindly for the Revenue Procedure