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Thanks, that was very polite and helpful Mike.

Glad to hear it you finally found someone who can champion the right answer and are getting results.

So, given that the employer of JimW58's wife has been (through ADP) administering the plan improperly, anybody want to comment on what the plan SHOULD do to correct? Seems to me that there is a clear qualification failure of the universal availability requirement. The first question to ask is how long this failure has been going on? If more than two years I can't see how it could possibly be corrected without a VCP filing. Even if less than two years I can see the value in a VCP filing to ensure the correction maintains the qualification of the plan. Anybody know a gentle way that JimW58 can suggest that his wife's employer engage an ERISA attorney to suggest a course of action?

Not sure how big the employer is, but perhaps they will just change the plan to at least increase 15% up to 80% or even 60% or 70%. Lots of posts, but I'm just not sure if anyone suggested that yet or not. Such a limit has been MOOT since 2001. Perhaps the voice of reason will prevail. http://www.wiggin.com/5512 Higher Employee Contribution Limits as a Percentage of Pay. The maximum total allocation (the "annual additions limit") permitted for participants in a defined contribution plan is increased by EGTRRA from the lesser of $35,000 or 25% of pay, to $40,000 or 100% of pay. Previously, in order to stay within the overall limit, employers have typically limited employee contributions to 401(k) plans to, for example, 15% of pay. With the EGTRRA change, employers may want to allow employees to contribute 50% or more of their pay to a plan, on a non-matched basis (subject to the rule that pre-tax contributions must still be limited to $11,000 annually, as adjusted as described above). Allowing greater contributions as a percentage of pay typically benefits lower paid employees, and can help in passing nondiscrimination tests.

Echoing Tom, you might approach this as an "opportunity to clear up a confusion". If the ER has been operating the plan incorrectly, your role is helping educate them.