Making Up Missed Roth Contributions

[metsfan026]

We have a client with a participant who wanted to start contributing Roth contributions at the beginning of the year, but there was a payroll error and they never started.  Now the participant is asking how they can make up the missed contributions, since they are looking to make sure they get the Safe Harbor Match.

The question is, how can the participant makeup any missed contributions?  They are asking if they can fund them themselves and send a check.  I didn't think this was possible, and that it should have to be done through payroll (even though it's Roth).

I just wanted to make sure that I wasn't missing something.

Thanks in advance!

[ratherbereading]

No they can't fund it themselves. This is from a previous post - maybe a couple of years old:

[metsfan026]

1 minute ago, ratherbereading said:

No they can't fund it themselves. This is from a previous post - maybe a couple of years old:

Thanks!  So basically the Plan should make a contribution into the QNEC, but does the contribution also include the lost Safe Harbor Match they would've earned?

[ratherbereading]

Welcome.  I believe it can include the SH Match. Hopefully someone else will chime in!   

[mming]

Yes, I would imagine the participant would get an SH match.  However, would the match be based on the amount that would have been deferred had deferrals occurred when they were supposed to, or would it be based on the the QNEC amount?  If matches are made every payroll, for example, it would make sense to base the match on the QNEC amount to account for lost ROI, but if the employer normally contributes the whole match for the plan after the close of the year, then it may suffice to base it on what the participant's originally intended deferral would have been.  Just thinking out loud and would be curious what the prevailing opinion (or regulation) would be. 

[WCC]

This is addressed in Rev Proc 2021-30 under the "missed deferral opportunity"/"failure to implement an employee election". The employer must fund the total match the employee would have received had the correct deferral election been applied timely. In other words, if the employee elected to defer 6%, the match is based on a 6% deferral election, not the QNEC amount for the missed deferral.