IRS Provides Relief for Correction of Elective Deferral Mistakes in 401(k) Plans

The IRS recently announced changes that make it significantly easier to correct employee deferral mistakes (also known as elective deferrals) in qualified retirement plans.  The changes make modifications to the IRS’ Employee Plans Compliance Resolution System (“EPCRS”), which is the IRS’ comprehensive correction program for qualified retirement plans.

Automatic Enrollment Correction Relief

If a qualified plan has automatic enrollment and it either (1) does not automatically enroll employees in accordance with the terms of the plan’s automatic enrollment feature or (2) does not implement an employee’s affirmative election, the new guidance provides that as long as the employee is enrolled in the plan within 9-1/2 months following the end of the plan year of the failure (or earlier if the employee notifies the employer of the mistake), the employer is not required to make a correction for the missed elective deferrals.  Read More ›

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