Missed Roth Catch-up contributions

Due to the new Roth catch-up mandate, we have a couple plans with situations where the Roth indicator did not get turned on properly to allow the deemed Roth spillover. This is some new territory for me!  I am checking on corrections - 1. any QNEC will be pre-tax for missed Roth, 2. if the missed contribution occurred more than 3 months ago then a 25% QNEC will be due based on missed deferrals during the applicable period of the year. How is this correction feasible under the Roth catch up mandate? It does not make sense that their catch ups will be a pre tax QNEC.  Any thoughts would be appreciated.

I think it is feasible because the participant is still being taxed on all of their income except for the $24,500 pre-tax, which I believe was the intent of the mandate. While there may be some pre-tax earnings growth, I do not think the federal budget is concerned with that, nor with the fact that the company receives a tax deduction for the QNEC. 

Roth gets very convoluted because in addition to the missed deferral corrections, the year of taxation comes into play along with tracking the first year in which the participant has a Roth contribution.

There was an outstanding presentation made at the ASPPA Spring National Conference titled Double the Roth: Understanding Catch-Ups and Employer Roth Contributions"? (Workshop 10 presented on Day 2).  It goes into a deep dive on the various fact patterns and related correction methods.  You may be able to access either as an ASPPA member or possibly by doing a search for the session title.

Thanks I will look for the presentation.

As a follow up question, is it common to wait until after the plan year to fund a QNEC for a missed deferral for an HCE? This way the administrator can give the HCE an opportunity to contribute and make the QNEC only to the extend any additional amounts are due - i.e. offset the QNEC by what the HCE actually contributes for the plan year. Thanks!

Yes, that is not uncommon from our experience.  Most/many correct the election prospectively but hold off on determining/funding the MDO QNEC until after year-end, then determine the total actual elective deferrals.  If reached max, no missed deferral and no MDO QNEC.

If there was an improper exclusion instead of failure to implement election, have to wait to year end anyways before know HCE's ADP.

Caveat--though likely got their match... determine whether the failure cause them to miss a match.  Per pay period, etc. might cause a quirk.

Great news. No match is due since the plan does not match catchups. I am wondering how to word the 45 day notice since a 25% QNEC will only be funded if HCE does not max out catch up by 12/31. I guess notice could say corrective contributions will apply to the extent there are missed catch up contributions at the end of the plan year?