Full Version: Deferrals stopped by payroll system in error
Employer has 401k and 403b Plans. After year end it is discovered that the deferral limits were not updated in the payroll system for several employees. This caused their deferrals to stop at $15,500 instead of $16,500 which is what they elected. How is this corrected ? Does the employer make contributions to the plans ? Is it 50% of the missed deferrals ? Thanks
QUOTE (MARYMM @ Jan 12 2010, 10:56 AM) 
Employer has 401k and 403b Plans. After year end it is discovered that the deferral limits were not updated in the payroll system for several employees. This caused their deferrals to stop at $15,500 instead of $16,500 which is what they elected. How is this corrected ? Does the employer make contributions to the plans ? Is it 50% of the missed deferrals ? Thanks
I have dealt with this situation for a client. You basically follow EPCRS for exclusion of otherwise eligible employees, yes it is 50% of missed deferrals using passing ADP rate for appropriate group and 100% of match.
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