Mistake of Fact question

[Kimberly S]

Surprise -- this is not a question about what situations qualify as a mistake of fact.

The instructions for correcting a mistake of fact deposit indicate that a refund must be processed within 12 months of the original deposit. I haven't been able to find any indication of what the correction is after 12 months. Would a correction after that time require a VCP filing?

[Guest Sieve]

What "instructions" are you referring to?

[Kimberly S]

The instructions I was looking at are for our in-house software. I'm trying to verify the accuracy of that statement. However, the 401(k) Answer Book also says, "If a contribution is made as a result of a good-faith mistake of fact, it may be returned to the employer within one year of when the contribution was made." There is no further comment about what to do after that time.

[J Simmons]

Take a look at IRS Notice 89-52, Rev Proc 90-49, Rev Rul 91-4, and PLRs 9107033 and 9144041

[ERISAnut]

Keep in mind that you are looking at a two part equation for self correction and mistake of fact issues. 1) Is the error significant in nature and 2) is the correction done timely after the error occured.

Mistake of fact situations have always been an area of little guidance from the IRS. However, they exist because the employer can perform the correct operation, but peform it on erroneous data. This will always happen. But, you still have to consider the two fundamental issues when deciding on your course of action.

Not sure this draws a definite line, but that is the apparent thinking behind the information you are referencing.

[Guest Sieve]

Where is the 12-month language? Is it in John's cites? All I can easily find is the 6-month language for multiemployer plans.

[K2retire]

Where is the 12-month language? Is it in John's cites? All I can easily find is the 6-month language for multiemployer plans.

However, the 401(k) Answer Book also says, "If a contribution is made as a result of a good-faith mistake of fact, it may be returned to the employer within one year of when the contribution was made."

[Guest Sieve]

Any primary source cite (i.e., IRS or DOL regs, rulings, etc. )?

[Slider]

The 12 month rule comes from ERISA Section 403©(2), not the Code. It's referenced in Revenue Ruling 91-4.

[Kimberly S]

Thanks for that tip. I had not yet found all of the source material in John's earlier post.

[Guest Sieve]

Thanks, Slider.

(This is the world's record shortest post that has ever been modified!!)