ADP Failure - 10% penalty even if using 'one-to-one' correction?

[AlbanyConsultant]

I'm working on a PYE 9/30/16 401(k) plan where the employer is just not giving us what we need to complete the ADP Test.  I know it's going to fail, but I can't even get in the ballpark of completing the test.

 

Since we're past 2.5 months after the end of the plan year, the 10% penalty will apply.  Now that the next plan year end is looming, I'm trying to scare the employer into getting us the data or else.  If we cross 9/30/17, then the correction is an EPCRS issue and the plan sponsor has to deposit a QNEC equal to the amount refunded.  But what about the 10% penalty - is that still applicable?  Or does that go away somehow?

 

Thanks.

[BG5150]

They don't HAVE to do refunds.  They can provide a QNEC to everyone in an mount enough to pass the test.  However, in either case, you cannot test otherwise excludables separately.

[Mr Bagwell]

The 10% still applies.

Scare the employer by whatever means necessary.

I'd charge an extra fee for all the extra work that has to be done.  Earnings calc to date and then calculation of the QNEC....

Good Luck getting the census.