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Posted

So I have a client that thru a clerical error, did not deduct 401k deferrals for the 11/29/19 paycheck.  We discovered this yesterday.  If they give notification letters out to the affected participants, do they still have to do a QNEC, since it has been such a short period of time and just one payroll?

They apparently only do medical deductions 2x per month, but are paid bi weekly, and this was the 3rd pay check for November, so no medical deductions, but someone accidently cleared out the 401k deductions...

QKA, QPA, ERPA

 

Posted

EPCRS doesn't really spell out (at least as a safe harbor method of correction) simply doubling-up next week's amounts, does it....(With an employer adjustment for missed earnings for the late week, perhaps?)

Posted

I don't think that is what they are looking to do anyway.  Our concern is that this is technically not they forgot to START deferrals for a new participant, but that they just missed the deferrals for all 6 or 7 participants who defer each pay period.  We are trying to find out if this type of error still qualifies for the "notice only" correction.

QKA, QPA, ERPA

 

  • 3 weeks later...
Posted

I had the same exact problem with a client. I believe I had them do notice only within the time period and told them they had to do a match for that pay period but no QNEC for the deferral.

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