Corrective QNECs from Suspense/Unallocated Account

[LANDO]

Assuming the plan document does not preclude the following, can "Excess Allocations" placed into an "unallocated account" pursuant to EPCRS, Rev Proc 2016-51, Section 6.06(2)be used to fund corrective QNECs required under EPCRS, Rev Proc 2016-51, Section Appendix A.05(2)(b, for a missed deferral opportunity? 

 

Situation: Sponsor failed to withhold deferrals for an eligible participant, but contributed $7000 to his deferral account anyway.  Since the amounts were not deferrals, the amounts are being removed from his deferral account and placed in an unallocated account.  This participant now has missed deferrals and is owed a QNEC.  Can the amounts removed from his account and placed in an unallocated account be used to fund his corrective QNEC?  Please assume there is nothing in the plan document that would preclude such a practice.

 

Thanks in advance for your thoughts.

[C. B. Zeller]

Assuming the plan was properly amended to provide that QNECs are non-forfeitable at the time they are allocated, then I do not see a problem with this.