Missed Opportunity to Defer with Safe Harbor Match

An employee eligible 1/1/2022 was discovered to have not been given opportunity to defer until 6/1/2022.  If they elect to not defer at all, Is the only correction for the Missed Deferral Opportunity the greater of 3% of comp or the maximum deferral percentage for the safe harbor match that is 100% or more?  

For example, if SH match is 100% of 1st 3%, and 50%, would they just contribute a 3% of comp QNEC?

Whether or not they choose to defer, the correction for the missed 5 months is the same. https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide-eligible-employees-were-not-given-the-opportunity-to-make-an-elective-deferral-election-excluding-eligible-employees

"The amount of the QNEC is equal to 50% of the employee’s missed deferral determined by multiplying the actual deferral percentage for the employee’s group (HCE or NHCE) in the plan for the year of exclusion by the employee’s compensation for that year."

EPCRS has an example for the safe harbor match plan. 2021-30 example 8.

On 6/29/2022 at 10:17 AM, 401king said:

Whether or not they choose to defer, the correction for the missed 5 months is the same. https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide-eligible-employees-were-not-given-the-opportunity-to-make-an-elective-deferral-election-excluding-eligible-employees

"The amount of the QNEC is equal to 50% of the employee’s missed deferral determined by multiplying the actual deferral percentage for the employee’s group (HCE or NHCE) in the plan for the year of exclusion by the employee’s compensation for that year."

 

Note that the bolded 50% in the above quote is not always true.  By my count, the EPCRS contains three correction methods calling for a 0% QNEC, one correction method calling for a 25% QNEC, and then the general rule calling for a 50% QNEC, and other correction methods are possible if they are reasonable and appropriate.  In the original poster's situation, I suspect that the 25% QNEC option is the best one available.