Common use of Elective Deferral Failures Clause in Contracts

Elective Deferral Failures. (1) The appropriate QNEC for the failure to allow an employee to elect and make elective deferrals (including designated Xxxx contributions) for a portion of the plan year is equal to the missed deferral opportunity which is an amount equal to 50% of the employee’s missed xxxxxxxx. The employee’s missed deferral is determined by multiplying the ADP of the employee's group (either highly or nonhighly compensated), determined prior to correction under this section 2.02(1)(a)(ii), by the employee's plan compensation for the portion of the year during which the employee was improperly excluded. In a safe harbor § 401(k) plan, the employee’s missed deferral is determined by multiplying 3% (or, if greater, whatever percentage of the participant’s compensation which, if contributed as an elective deferral, would have been matched at a rate of 100% or more) by the employee’s plan compensation for the portion of the year during which the employee was improperly excluded. The missed deferral for the portion of the plan year during which the employee was improperly excluded from being eligible to make elective deferrals is reduced to the extent that (i) the sum of the missed deferral (as determined in the preceding two sentences of this paragraph) and any elective deferrals actually made by the employee for that year would exceed (ii) the maximum elective deferrals permitted under the plan for the employee for that plan year (including the § 402(g) limit). The corrective contribution is adjusted for earnings. For purposes of correcting other failures under this revenue procedure (including determination of any required matching contribution) after correction has occurred under this section 2.02(1)(a)(ii)(B), the employee is treated as having made pre-tax elective deferrals equal to the employee’s missed deferral for the portion of the year during which the employee was improperly excluded. (See Examples 4 and 5.) (2) The appropriate corrective contribution for the plan’s failure to implement an employee’s election with respect to elective deferrals is equal to the missed deferral opportunity which is an amount equal to 50% of the employee’s missed deferral. Corrective contributions are adjusted for earnings. The missed deferral is determined by multiplying the employee’s deferral percentage by the employee's plan compensation for the portion of the year during which the employee was improperly excluded. If the employee elected a fixed dollar amount that can be attributed to the period of exclusion, then the flat dollar amount for the period of exclusion may be used for this purpose. If the employee elected a fixed dollar amount to be deferred for the entire plan year, then that dollar amount is multiplied by a fraction. The fraction is equal to the number of months, including partial months where applicable, during which the eligible employee was excluded from making catch-up contributions divided by 12. The missed deferral for the portion of the plan year during which the eligible employee was improperly excluded from making elective deferrals is reduced to the extent that (i) the sum of the missed deferral (as determined in the preceding three sentences) and any elective deferrals actually made by the employee for that year would exceed (ii) the maximum elective deferrals permitted under the plan for the employee for that plan year (including the § 402(g) limit). The corrective contribution is adjusted for earnings. The requirements relating to the passage of the ADP test before this correction method can be used, as described in Appendix A section .05(5)(d) still apply.

Elective Deferral Failures. (1) The appropriate QNEC corrective contribution for the failure to allow an employee to elect and make elective deferrals (including other than designated Xxxx contributions) for a portion of the plan year is equal to the missed deferral opportunity which is an amount equal to 50% of the employee’s missed xxxxxxxx. The employee’s missed deferral is determined by multiplying the ADP of the employee's group (either highly or nonhighly compensated), determined prior to correction under this section 2.02(1)(a)(ii), by the employee's plan compensation for the portion of the year during which the employee was improperly excluded. In a safe harbor § 401(k) plan, the employee’s missed deferral is determined by multiplying 3% (or, if greater, whatever percentage of the participant’s compensation which, if contributed as an elective deferral, would have been matched at a rate of 100% or more) by the employee’s plan compensation for the portion of the year during which the employee was improperly excluded. The missed deferral corrective contribution for the portion of the plan year during which the employee was improperly excluded from being eligible to make elective deferrals is reduced to the extent that (i1) the sum of the missed deferral (as determined in the preceding two sentences of this paragraph) and any elective deferrals actually made by the employee for that year would exceed (ii2) the maximum elective deferrals permitted under the plan for the employee for that plan year (including the § 402(g) limit). The corrective contribution is adjusted for earnings. For purposes of correcting other failures under this revenue procedure (including determination of any required matching contribution) after correction has occurred under this section 2.02(1)(a)(ii)(B2.02(1)(ii)(B), the employee is treated as having made pre-tax elective deferrals equal to the employee’s missed deferral for the portion of the year during which the employee was improperly excluded. (See Examples 4 and 5.) (2) The appropriate corrective contribution for the plan’s failure to implement an employee’s election with respect to elective deferrals is equal to the missed deferral opportunity which is an amount equal to 50% of the employee’s missed deferral. Corrective contributions are adjusted for earnings. The missed deferral is determined by multiplying the employee’s deferral percentage by the employee's plan compensation for the portion of the year during which the employee was improperly excluded. If the employee elected a fixed dollar amount that can be attributed to the period of exclusion, then the flat dollar amount for the period of exclusion may be used for this purpose. If the employee elected a fixed dollar amount to be deferred for the entire plan year, then that dollar amount is multiplied by a fraction. The fraction is equal to the number of months, including partial months where applicable, during which the eligible employee was excluded from making catch-up contributions divided by 12. The missed deferral for the portion of the plan year during which the eligible employee was improperly excluded from making elective deferrals is reduced to the extent that (i) the sum of the missed deferral (as determined in the preceding three sentences) and any elective deferrals actually made by the employee for that year would exceed (ii) the maximum elective deferrals permitted under the plan for the employee for that plan year (including the § 402(g) limit). The corrective contribution is adjusted for earnings. The requirements relating to the passage of the ADP test before this correction method can be used, as described in Appendix A section .05(5)(d) still apply.