ADP refund - wrong amount

[pholosofizer]

We were just told that a 2013 ADP refund (processed by 3/15/14) was done for the wrong amount. Lets say the correct refund should have been $2,000 but the amount processed was $1,500 (so we're short $500 now).

Since we're in 2015 and passed the 12/31/14 deadline, do we have to do a 1-1 QNEC plus remove the remaining excess+earnings? If we do the QNEC, each participant will end up with $1-2. Is there anyway to write this off as a clerical error and just process the distribution?

If the QNEC is necessary, could we avoid deposited the $1-2 for NHCEs from the 2013 plan year that are still active but never had/still don't have an account?

Thanks!

[BG5150]

You can do a QNEC enough to pass the test, if that amount is lower.

But no way around no QNECs, I believe.

[John Feldt ERPA CPC QPA]

EPCRS has a few options for allocating the QNEC to reduce the number of NHCEs with small balances, although it is only of small help. Revenue Procedure 2013-12, Appendix B, section 2.01(1)(b)(iv)(B)(1):

... The contribution made under paragraph (1)(b)(iv)(A) is allocated to the account balances of those individuals who were either (I) the eligible employees for the year of the failure who were nonhighly compensated employees for that year or (II) the eligible employees for the year of the failure who were nonhighly compensated employees for that year and who also are nonhighly compensated employees for the year of correction. Alternatively, the contribution is allocated to account balances of eligible employees described in (I) or (II) of the preceding sentence, except that the allocation is made only to the account balances of those employees who are employees on a date during the year of the correction that is no later than the date of correction. Regardless of which of these four options (described in the two preceding sentences) the Plan Sponsor selects...

[austin3515]

Once in my life time, I did the one-to-one as a match to avoid the ridiculous outcome of having a host of people with $1 in their account which would inevitably be forfeited anyway. Sometimes reason has to trump strict readings of the rules (at least in my opinion).