Participant completes an enrollment form electing ROTH deferrals. Client withholds the deferrals from the paycheck for about one year as pre tax deferrals. Deferrals went into ROTH account in the 401k plan. What is the fix?

Participant elected Roth, plan received Roth. It seems like the only thing to fix is the W-2 showing it as pre-tax.

I agree with k2retire. There's no problem in the plan. Just in payroll.

But if you do leave the payroll coding as it was, you should move the money to the pre=tax source in the plan.

Does(n't) the participant have some right to have it corrected? If he elected to have money withheld and it wasn't, there is a procedure for that...

Why would you leave the payroll coding the way it was when it is clearly wrong? I could, perhaps, see offering the employee a choice of whether to correct payroll or the plan, since it will mean his withholdings were lower than they should have been. But even so I think that could be a tough sell in an audit.

If I recall correctly, the election to Roth or not one's k deferrals has to be irrevocable. So I don't think I'd give the EE the choice now of having the deferrals pre-tax or Roth.

mmm, when you said this



I thought you meant to fix it to change it TO pre-tax (but it already is pre-tax) but now I understand that you meant fix it from pre-tax to Roth.

And yes, I question whether it is appropriate to leave it. Sorry, I was confused.