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For the brief period exclusion rule, the requirement is that the participant have the opportunity to defer for at least the last 9 months of the plan year. For someone improperly excluded from all deferrals, that effectively requires correction during the first 3 months of the plan year so that the participant is able to defer for the last 9 months. But, it doesn't specifically say that only failures corrected in the first quarter (at least 9 months before year end) are eligible. The actual wording is: I think that would also apply if someone was able to defer for at least the last nine months with the exception of a bonus check, provided that there is sufficient time after the error that the participant could change their election to max out deferrals if they wanted to. If the IRS really wanted to limit this to only apply to corrections done in the first 3 months of the plan year, I think they would have said so. That would have been a lot easier to write than what they did. Like so many things in this business, I'm sure others have differing opinions.