We have a plan which did not correct excess contributions within 12 months after the close of the plan year.
An acceptable correction method under EPCRS is to return deferrals to the affected HCEs and contribute a QNEC for the same amount to the NHCE group, this is known as the one-to-one correction method. Cite is EPCRS, Rev. Proc. 2003-44 Appendix B, Section 2.01(b) (page 53-54).
EPCRS further states:
The QNEC contribution is allocated to the account balances of those individuals who were either (I) the eligible employees for the year of the failure who were not highly compensated employees for that year or (II) the eligible employees for the year of the failure who were not highly compensated employees for that year and who also are not highly compensated employees for the year of correction.
Alternatively, the contribution is allocated to account balances of eligible employees described in (I) or (II) of the preceding sentence, except that the allocation is made only to the account balances of those employees who are employees on a date during the year of the correction that is no later than the date of correction.
Regardless of which option the employer selects, the contribution is allocated to each such employee either as the same percentage of the employee's compensation for the year of the failure or as the same dollar amount for each employee.
Does this mean the QNEC is given only to NHCE with account balances or to any NHCE who is eligible?