Payroll Deduction Error

[Guest RGary]

One of our clients discovered they under-deducted an employees FSA annual election for 2006. The employee has not submitted or been paid any claims yet. What are the client's options at this point?

[QDROphile]

"What are the options?" is a test of imagination under section 125 because there is no formal guidance for correction. You don't really want a list of options.

I suggest that the employer leave the chips as they fell with salary reductions and pay the full amount of benefit elected by the employee to the extent the employee submits timely claims for qualified expenses.