Leaderboard

I'm a big fan of distinguishing between perception and reality. But I think you're mis-using the term here - it was not filed, period. I haven't tried using a reasonable cause since they extended penalty relief to EZs but I don't think this is a reasonable cause.

I doubt you could get the IRS to agree to that even in VCP, though you could try. If self-correction, then violates too many rules (e.g., the CODA rules for a one-time irrevocable election) to be worth considering.

One of the guiding principles of the correction program is to put the plan in the position it would have otherwise been in had the failure not occurred. If his election was in place at the time that the failure occurred, then the employer is obligated to honor that election. There is no basis for allowing him to retroactively waive his election merely because the correction is being done now. Another way to think about it is that the correction is simply fixing an operational defect in the plan. It is not some benefit or right that is available to individual participants. Therefore there is nothing to waive because the correction is not adding anything new to the plan.

At the risk of stating the obvious, please review the plan's Summary Plan Description for discussion about catch-up availability.