Generally, correcting this type of oversight concentrates on making the employee whole, i.e. make up for the missed deferral opportunity in a 401(k) plan and/or the missed employer contribution in a profit sharing plan in addition to earnings on the missed deferral or contribution. In a 401(k) plan the correction is accomplished by an employer “Qualified Nonelective Contribution” (QNEC) equal to 50% of the employee’s group Actual Deferral Percentage (ADP). The group refers to either a Highly Compensated Employee (HCE) or a Non-Highly Compensated Employee (NHCE).
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