deferrals made, but not allowed in document!

[Belgarath]

Here's one I haven't seen before.

Client installed a new 401(k)/PS plan for 2008. clearly indicated on plan "set-up" papers that they wanted to allow up to 100% deferrals, catch-up, and Roth.

However, document was completed by TPA, and signed by client, not allowing deferrals.

Client deferred anyway.

Can this be fixed by retroactive amendment under VCP? There's no specific fixmin Appendix B. However, plan loans or hardship withdrawals that were allowed where document does not allow them are eligible for correction, so it seems reasonable to attempt this. Anyone ever run into this? Success or failure with a fix? Other fixes? Perhaps consider an excess deferral?

[rcline46]

Deferrals cannot be made until doc permits them, based on later of date signed or effective date. In this case I think you need a VCP submission disclosing client request and actual doc and ask for allowance to permit deferrals. This could take a while.

In the meantime get a new doc signed so at least amounts going forward are protected.