Roth deferrals Treated as pre-tax by employer

[Kimberly S]

Client has contacted us about how to correct their error. About 15 participants elected Roth deferrals, but the client's payroll provider withheld pretax deferrals for them instead. The funds are showing as Roth with the custodian, but were reported as pretax on the W-2s. At this point, do you fix the W-2s or move the money from Roth to pre-tax with the recordkeeper? I can see pros and cons either way, so I'd love to know what others are doing in this situation.

[JanetM]

If the participants elected Roth you must fix the w-2 and make up for the tax withholding. Not following participant direction is operational failure. If this is 2008 you have the time to fix. If it was 2007 error you have bigger problems.

[Kimberly S]

If the participants elected Roth you must fix the w-2 and make up for the tax withholding. Not following participant direction is operational failure. If this is 2008 you have the time to fix. If it was 2007 error you have bigger problems.

It was 2007. 2008 W-2s have not yet been issued.

[JanetM]

You need to fix the withholding. I am not sure of the steps do that. Iam not sure if you can simply fix in 2008.

May someone else on the boards has an idea.