Employer X maintains a 401(k) plan with a discretionary ps contribution. Their document excludes from eligible compensation "bonuses". Due to a change in payroll systems during 2001, employer inadvertantly did not exclude the bonus amounts from their calculation of employer match and ps contribution. Also deferrals were withheld from the bonuses.

I have read through Rev Proc 2001-17 and while I don't see anything specific to this example, I would gather from the other examples that this would be an "insignificant operational error" and that the employer should utilize the self correction program.

If I'm totally off base, where can I go to determine what the employer should do?

Any assistance would be greatly appreciated.

you might want to read the Q & As 133, 134, and 135 under Correcting Plan Defects. These address the issue of using incorrect compensation.