We have a large client with several thousand employees that has discovered
401(k) contributions have not been deducted from overtime for several years. Potentially 1000's of affected ees over a multi-year period. The document clearly states that overtime is included in the compensation defintion for deferrals. Any ideas?

Thanks

You have a clear failure to operate the plan according to its terms, and so you need to get the client to have some interaction with the IRS. Read Rev. Proc. 2003-44 to see how.

Perhaps. I suggest the sponsor should have a conversation with its ERISA attorney first. The attorney will initiate the "interaction" with the IRS.

You might look at the difference between the definition of compenation (which tends to be comprehensive) and the designation of what sources of pay will be charged with deferrals (which may be more limited). It is very unlikey that this will help because most plan documents don't make that distinction. I suspect a lot of plans have items of compensation that are not actually charged with deferrals, but not usually with the magnitude of your problem. Some items of compensation are not cash and can't be charged directly.