EPCRS and Matching Contributions

[Guest ccl]

Question - A 401(k) Plan that I am handling requires that in order for employees to receive matching contributions, they work 1,000 hours of service per year. The problem is that the Company has not enforced this rule and has matched all employees regardless of hours worked. My question is, how is this corrected? Can I do self correction and retroactively amend the plan or do I have to do VCP? If anyone is familiar with a situation like this please help!

Thanks!

CL

(cites are always nice)

[jpod]

Unless something has changed in the latest EPCRS rev. proc., there are only a few operational defects which can be corrected via a plan amendment without making a VCP submission, and I don't believe your situation is one of them. You should be able to confirm this quickly by doing a word search through the latest rev. proc. Assuming I am correct, I think it's highly likely that IRS will approve a correction via a retroactive amendment to conform the plan to its actual operation (assuming all participants have been treated the same). Unfortunately, a written submission will be required, which will take some work, and there will be a compliance fee paid to IRS.