MGOAdmin Posted October 2, 2023 Posted October 2, 2023 As I understand it, if an employee is not offered a 401k plan when they are eligible, as long as their deferrals start within 3 months of entering the plan there are no penalties/QNECs due. What happens if a plan if an employee signs up for a plan but the deferrals don't start until 3 months after signing up. This is dissimilar from the first scenario since the employee is offered and opted in but deferrals did start for a short time. Would a QNEC be due for the employee that signed up but wasn't started for 3 months? The IRS website gives the example of the first scenario where an employee is never offered the plan but I could not find the second scenario.
justanotheradmin Posted October 2, 2023 Posted October 2, 2023 it falls under the same correction umbrella. It is a Failure to Implement a Deferral election. the IRS website is great. but best to go to the actual Revenue Procedure. https://www.irs.gov/pub/irs-drop/rp-21-30.pdf See Appendix A. Luke Bailey 1 I'm a stranger on the internet. Nothing I write is tax or legal advice. I'd like a witty saying here, but I don't have any. When in doubt, what does the plan document say?
MGOAdmin Posted October 2, 2023 Author Posted October 2, 2023 Thanks for the reply. This is what I was thinking but got some pushback from another provider.
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