QNEC for Missed Deferral and 402(g) Limit

I see a few prior threads on this, but wanted to see if there have been any changes in opinion.

If a plan sponsor makes a corrective QNEC for missed deferrals before the participant starts deferring for the year, does the QNEC count toward the participant's 402(g) limit? For example, the plan sponsor fails to implement a deferral election from January through June and corrects using the 25% QNEC. Say the deferral would have been $8,000, so the QNEC is $2,000. The participant's correct deferrals start in July. Can the participant still contribute to the full 402(g) limit, or the 402(g) limit minus $2,000?

EPCRS seems clear that the opposite fact pattern (participant has deferred, then error is caught and QNEC made) requires limiting the corrective contribution to the 402(g) limit. But no rules or examples in EPCRS apply to the QNEC first then deferrals.

Would appreciate any thoughts.

I say yes, you have to limit the correction to the 402(g) limit.  If the participant has contributed the maximum for the year, how can there be a missed deferral or missed opportunity?

Thanks. I agree that in my latter example (participant has already deferred the limit, then a corrective QNEC is made) the QNEC itself would be capped by the 402(g) limit.

In the former example (a corrective QNEC is made, then the participant starts deferring) it would be capping the participant's elective deferrals, not the QNEC. Nothing in EPCRS squarely addresses that situation. In that case, would you tell the participant they can only defer up to the 402(g) limit less the QNEC amount, even though those are two different money sources?

Further to this, a reading of the limitations suggests not only that the 402(g) limit potentially be reduced by the amount of QNEC itself, but rather by the full amount of the "missed deferral." 

In other words, if the participant would have deferred $8,000 in the first half of the year, giving them a $2,000 QNEC, the 402(g) limit would be reduced by $8,000 (the full "missed deferral") and not by $2,000 (the QNEC amount). 

I also still do not see a compelling statement in ECPRS on the participant's remaining 402(g) limit for the rest of the plan year after the QNEC has been made. I suppose the plan sponsor could wait to deposit the QNEC until after the close of the plan year, but then earnings would accrue the whole time (and the participant would likely stop their deferrals before the 402(g) limit to get the employer's "free" deferral).

The 402(g) reduction amount (full missed deferral vs. QNEC amount) has been raised in a few earlier threads, with no satisfactory answer. See here:

And here:

I agree that this is an issue without guidance. I also agree that if you're making the correction within the same plan year, consistency would seem to require you to limit the participant to the 402(g) limit reduced by $8,000. In some ways, then, it seems better to wait until the plan year ends to correct these errors. IRS guidance on this point is needed.