Sungard Relius, a reliable source of technical information for plan professionals, tackles the question of how to correct improper exclusions in a safe harbor plan. As part of answering that question, Relius also answers the following questions, including examples.
• How does a plan correct the elective deferrals for an employee who is improperly excluded from a safe harbor 401(k) plan?
• If an employer improperly excluded an eligible employee from a safe harbor 401(k) plan, how does the plan correct the matching contribution failure?
• If the plan also included an additional matching formula, would the employer need to make a corrective contribution for that matching formula? Would the corrective contribution need to be in the form of a QNEC if the matching contribution formula were subject to a vesting schedule?
Though most plan advisors will rely on their record keeper partner or TPA to help with technical corrections, part of being a pension professional is understanding the technical requirements of the industry.
