Missed deferrals

[Cynchbeast]

Sponsor initially reported EE as hired in 07/2018, but turns out actual hire date was 06/13/18.  This means she entered plan 07/01/19 rather than 01/01/20, so we have lost opportunity to defer for 07/01/19 through 12/31/19.

Plan has only owner and this new EE, so there is no ADP for NHCEs other than her.  She probably won't be deferring, but I know that doesn't erase the lost opportunity when she might have deferred.  Plan has Deferrals and SH match.

Since we have no average deferral rate for NHCEs, it seems it would be best to assume 5% deferrals (minimum rate to get maximum SH Match), and 4% SH match.

Does this sound right?  What should QNEC be?  50% of deferrals plus all of SH match missed (total 6.5%), 50% of all contributions (total 4.5%), or what?

I know this probably sounds elementary, but it has been quite awhile since I had this situation.

[Mr Bagwell]

Cynch,

The average deferral part is out because the plan is safe harbor match.

Look at example 8, Appendix B, in EPCRS.  It's pretty much what you are asking.

[Cynchbeast]

Thank you.  That is crystal clear.