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A non-electing 403(b)(9) church plan has an employer with several operational errors. The employer is currently working towards submitting a VCP application. It has been identified by one person in this organization that part-time employees working 20 hrs/week or more were never given the opportunity to participate via salary deferral. Now, the plan is not subject to the Universal Availability rule, BUT the overall plan document indicates default eligibility for deferral participation as 20 hrs/week UNLESS an employer overrides this eligibility with a statement on its Employer Adoption Agreement in which they can raise or lower the hour threshold. This employer did not indicate a threshold for eligibility on its Employer Adoption Agreement. However, one of the individuals believes because the employment offer to one or more part-time employees stated there would be "no benefits" with the part-time position(s), he believes that there was not an operational failure to follow the written plan document. Is he right? Is this a case of "facts and circumstances" in which the employer could justify not giving an opportunity to participate because the employment offer stated no benefits would be available? Thanks in advance for your responses. KJ

I just joined a great company as a 401(k) administrator and immediately saw that their annual 401(k) match calculation formula of 25% of first 6% had two failures (1) failed to cap wages at the the 401(a)17 compensation limit and (2) failed to cap the match computation based on the first 6% of wages. They essentially took 25% of deferrals across the board as the company match. $750K overpaid match in 2018 by my calc. Match was correct for those whose effective deferral rate was 6% or less (400 EEs). The match on 600 EEs with higher deferrals than 6% were all overpaid. It is an audited Plan; been around for many years making this mistake. I can see that a VCP filing will be needed. I took a look at Rev Proc 2018-52, 2.07(1)(b), Example 25 and I don't see how a retroactive amendment will work when it's not just a 401(a)(17) failure but compounding computational errors. The company is successful and expensed and shelled out way more than it should have. The company I'm sure they would be more willing to fix going forward than pull funds out of accounts. I'm sure we'd offer to pull out money from executives at a certain level and above if that's what it takes. Has anyone seen such a longstanding mistake and what would be a typical IRS response to the company be with such a huge overpayment? How far back would they make the correction go? What negotiation can be done? Haven't informed ERISA counsel (I'd fire the auditor if it were my decision) yet only working my way up the chain of command at this point. I am a new hire afterall. I just want to have some idea of what the company is facing here before I push harder. Thank you!! https://www.irs.gov/retirement-plans/fixing-common-plan-mistakes-using-a-plan-amendment-for-correction-in-the-self-correction-program