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I agree with jpod. Some old 403(b) plans using annuity contracts thought that they could not make employer contributions unless an employee enrolled (because of the annuity contract application rules). ERISA plans just do not work that way. The employer has to make the contribution and cause the vendor to open an account to receive it. If the vendor refuses (and we have had this happen), the responsibility is still on the plan sponsor to add a vendor which will accept these contributions. If there is a withdrawal provision which would work (in-service?), one might suggest to the reluctant employee that he or she withdraw the contribution from the plan and contribute it to the church. Or just make a "like" contribution to the Church and wait for a distribution option which will not cause a pre-mature distribution penalty. Sometimes employees in such situations think they are doing the church a favor by trying to refuse the contribution. It just does not work that way and I would talk the employee through the idea of contributing a like amount to make the church "whole."

You're not going to just amend to "turn off" the Roth going forward? Does the W-2 for the employee show Roth deferrals, or pre-tax? I'd go in under VCP - tell the IRS, hey we never expected there to be Roth, nobody (other than this guy) even asked about it, etc. If all your other documentation supports the fact that the document was done with the mistake and there was no other expectation, they might give you the okay. I guess there's some difference to the appeal you'll make, depending on the rest of the fact pattern regarding how those amounts did go in.

Every employee has an employment contract, one way or another. Determining and disputing the terms of employment are what keeps a lot of employment lawyers in business. Of course you have to use the plan terms for participation in the plan. To do otherwise would create direct problems with plan documentation and operation. I observed that the failure to keep the personnel manual consistent with the plan terms is a potential source of liability that is not directly related to the operation of the plan. If the organization has an employment dispute with an employee, it is likely that the employee's lawyer will be interested in the personnel manual. Many employers are surprised to find that ERISA is their friend in employment disputes because it is often a shield against nuisance employment claims, such as eligibility for benefits or severance compensation. Your caption suggests that ERISA is not of service to this organization, so the employment law concerns are relevant.

or Dear Agent Montoya