All too often, the sponsor of a 401(k) or 403(b) plan discovers that elective deferral contributions were not deducted from the pay of an eligible employee(s) which results in what the IRS calls a “missed deferral opportunity.” Other types of errors that fall into this category are; failure to inform an eligible employee of a 401(k) or 403(b) plan, failure to implement automatic enrollment, failure to implement automatic increases and incorrect compensation used to calculate the employee deferral.

Fortunately, the Internal Revenue Service (IRS) offers an approved method of correcting the missed deferral under their Employee Plans Compliance Resolution System (EPCRS). While the general method of correction is the same, there are slightly different requirements that must be met depending on the timing of the missed deferral. If this happens to you, we are here to help. For more information, see our flyer on Correcting Elective Deferral Errors.