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Plan definition of compensation is W-2 plus 401(k) and 125 elective deferrals and reduced by the safe harbor taxable fringes in IRC Section 414(s) regulations. This includes "deferred compensation". The plan sponsor has an elective deferred compensation plan ("SERP") in which senior executives participate. The 401(k) master plan document (national prototype) allows the sponsor broad discretion in designing procedures for participants to make elective deferrals and limit is the 402(g) limit. The sponsor's payroll dept has been applying 401(k) deferral election percentages by the senior execs to their gross pay, before the SERP deferrals. The match is fully discretionary - no formula or limits in the document. Company announced that it would match "100% of deferrals up to 4% of pay". Sponsor also uses gross (before SERP deferrals) pay for applying the match. Recordkeeper believes sponsor needs to do voluntary correction under EPCRS as it was using a compensation definition not in the plan. The recordkeeper uses the 414(s) definition of compensation for ADP and ACP testing and the plan passes both tests every year. Code section 401(k) and (m) cite to 414(s) compensation in describing the ADP and ACP test. For deferrals, section 401(k) just describes a plan that allows an employee to elect cash or deferral into the plan. 1.401(a)(4)-1(b) regs say that deferrals and matching contributions are deemed to pass 401(a)(4) if the ADP and ACP tests are passed. Does the sponsor have a good faith argument that its administrative procedures and practices are not violating the plan document and 401(a)? I recall that on a previous post it was suggested that the sponsor amend the plan to adopt Medicare Wages to solve this issue.