QNEC and maxed deferrals

401(k) plan where employer missed depositing deferrals for an employee.  The missed employee deferrals totaled $30,500.  A QNEC will be made to correct this plus a match and earnings.

Can he continue to defer to the plan and receive a match since we are still in the same plan year ?  

Thanks!

I believe so but you must back the QNEC for the missed deferral out of the otherwise applicable plan or 402(g) limit for the year..

“Missed depositing” meaning it was withheld but not deposited? That’s not a missed deferral opportunity. That’s a fiduciary failure requiring corrected earnings. 
 

It would also seem by the amount you give, that the person has already deferred the maximum for 2024. How are they going to continue to defer?

To clarify, the employee elected 15% from his paycheck.  These funds were never withheld from his paycheck.

What would show on his W-2 ?

Keith, 

Are you implying that the QNEC for missed deferrals is going to 15,250?  If so, the employee would be able to defer via payroll another 15,250.  The 15,250 correctly deferred to the 401k plan would be the amount on the W-2.

As Draper55 opined, the participant is limited to the QNEC and Deferrals by the 402g limit for the year.  The participant does not get their cake and get to eat it too....

Hope that helps.

Yes, that does help.  Thanks for everyone's input.  Much appreciated.  

This sounds like a "failure to implement" which is similar but different from a "missed deferral opportunity".

Keep in mind that the corrective action depends upon factors such as whether the plan has auto-enrollment, the timing of when the issue was discovered and is being corrected, and the employee's current employment status.  These factors could determine if the correction is a 50% QNEC, 25% QNEC or no QNEC.  The full match with earnings will be due based on what should have happened.

Others here are correct that the QNEC will offset the 402(g) limit on deferrals the employee can make for the remainder of the calendar year.