missed deferral opportunity for rehire

[Lori H]

deferral only 401(k) did not allow a rehired former participant to make an election to rejoin the plan. (Plan sponsor believed the rehire needed to meet eligibility again). Rehire is an NHCE. Rehire date was March 2014. Does the QNEC and applicable earnings need to be 50% of the NHCE's ADP for the whole 2014 plan year? What about current 2015 calendar plan year? The rehire has made a new deferral election for this plan year and is now in the plan effective this month. Would a separate NHCE ADP need to be calculated for ytd 2015?

thanks

[Lou S.]

The QNEC would be for the missed deferral period. Presumably from his re-hire though the date he was allowed to participate. So you would have a QNEC due for his missed period in both 2014 and 2105.

[Lori H]

i understand, but the ADP for the NHCE group would be different in 2014 and 2015. Am I correct in my statement that a preliminary NHCE ADP would be calculated for YTD 2015 or Could the sponsor use the 2014 PY NHCE ADP or would the 2015 corrective QNEC be calculated after the close of the 2015 plan year when the final NHCE ADP is known?

Also, in another scenario, an employee became eligible and the sponsor did not allow them the opportunity to participate. Down the road they realize the exclusion and offer the participant to enter the plan. The excluded participant elects not to participate. The sponsor is still required to make the QNEC for the missed deferral opportunity, correct?

I'm thinking that the sponsor waits until the end of the 2015 plan year to determine the nhce adp and calculate the partial plan year QNEC along with yield then.