QNEC

[bzorc]

Plan auditor determines that the plan did not follow the definition of plan compensation while performing the 2017 audit of the plan. Tells the plan sponsor to calculate the necessary QNEC at 25% of missed deferrals, plus appropriate match. Going out to do the 2019 audit, they find that the plan sponsor did not remit the QNEC to the plan until January, 2020. The auditor believes that the Sponsor should now go back and recalculate the QNEC at 50%, since the remittance was after the close of the 2nd plan year following the discovery and calculation of the QNEC.

Any thoughts on this?

[Belgarath]

I agree with the auditor. There might possibly be an argument that it was timely if it was mailed (with PROOF of mailing) on some date reasonably before the 12/31/deadline - say it was mailed on December 23rd, for example, but didn't arrive until January 4th. That's grasping at straws, however. I don't know the specific details of your situation. Anyway, my take is that given the generous timeframes that IRS allows for the corrections, they are unlikely to be overly sympathetic.

[austin3515]

 Wow, that's a pretty darn good auditor! Most auditors don't know that much about correction principles.