Failure to allow participant to defer

[k man]

participant completed an enrollment form requesting a certain percentage of pay be deducted for 2005. however, employer failed to implement instructions. how can this be corrected? i think you need to follow the VCP method for exclusion of an eligible employee. basically the employer has to contribute at the deferral percentage for her group. do you agree or disagree?

[stephen]

I agree as long as you include the earnings that go with the deferrals.

[GBurns]

I have not read it as yet, but isn't the new Revenue Proc 2006-27 applicable in this case?

http://www.irs.gov/pub/irs-drop/rp-06-27.pdf

[Guest B2Randolph]

You correct this as a self-correction under EPCRS utililizing the eligible employee rule you previously quoted. If, however, the plan had a match contribution, the Employer must not only contribute the deferral the participant should have made, but the match and all earnings to both contribution sources.