Failure to Auto-Enroll Employee Correction?

[holdco]

Hello everyone! I have a question that I hope someone might be able to assist with.

We have a recently re-hired employee at our firm. Through no fault of our plan advisor (Schwab), he was not auto-enrolled in the 401(k) plan, which he should have been enrolled in since his re-hire date in June of 2010 through the present. Schwab recently sent him auto-enroll forms, and the employee will be auto enrolled by the next few paychecks.

What steps should we take to fix this issue, specifically vis a vis the IRS? Is this something that requires correction under EPCRS Rev. Proc. 2008-50, or is it a simpler fix?

Any assistance with this matter would be greatly appreciated. Thanks so much!

[QNPG]

Hello everyone! I have a question that I hope someone might be able to assist with.

We have a recently re-hired employee at our firm. Through no fault of our plan advisor (Schwab), he was not auto-enrolled in the 401(k) plan, which he should have been enrolled in since his re-hire date in June of 2010 through the present. Schwab recently sent him auto-enroll forms, and the employee will be auto enrolled by the next few paychecks.

What steps should we take to fix this issue, specifically vis a vis the IRS? Is this something that requires correction under EPCRS Rev. Proc. 2008-50, or is it a simpler fix?

Any assistance with this matter would be greatly appreciated. Thanks so much!

Here is a link to the IRS website:

The Fix Is In: Correcting Plan Mistakes - Correcting a Failure to Implement the Plan’s Automatic Enrollment Provisions

http://www.irs.gov/retirement/article/0,,id=212043,00.html

Hope this helps.

[holdco]

Hello everyone! I have a question that I hope someone might be able to assist with.

We have a recently re-hired employee at our firm. Through no fault of our plan advisor (Schwab), he was not auto-enrolled in the 401(k) plan, which he should have been enrolled in since his re-hire date in June of 2010 through the present. Schwab recently sent him auto-enroll forms, and the employee will be auto enrolled by the next few paychecks.

What steps should we take to fix this issue, specifically vis a vis the IRS? Is this something that requires correction under EPCRS Rev. Proc. 2008-50, or is it a simpler fix?

Any assistance with this matter would be greatly appreciated. Thanks so much!

Here is a link to the IRS website:

The Fix Is In: Correcting Plan Mistakes - Correcting a Failure to Implement the Plan’s Automatic Enrollment Provisions

http://www.irs.gov/retirement/article/0,,id=212043,00.html

Hope this helps.

Yes, that was super helpful! One quick follow-up (forgive me if it's silly): do I need to submit a VCP of some sort, or will it suffice just to make the corrective contribution? In other words, do I need to mail paperwork confirming the correction to the IRS? It really is just one employee, and nothing in the link says that something needs to be sent in.

Thank you again!

[Guest Sieve]

Self-correct. Nothing to IRS.

[holdco]

Self-correct. Nothing to IRS.

Thank you, that was very helpful! One quick follow-up. The calculation has to be adjusted for earnings. As the plan administrator, what do we tell Schwab with respect to this calculation? Is it in the EPCRS? Is it based on variable factors?

Thank you again!

[MARYMM]

Hello everyone! I have a question that I hope someone might be able to assist with.

We have a recently re-hired employee at our firm. Through no fault of our plan advisor (Schwab), he was not auto-enrolled in the 401(k) plan, which he should have been enrolled in since his re-hire date in June of 2010 through the present. Schwab recently sent him auto-enroll forms, and the employee will be auto enrolled by the next few paychecks.

What steps should we take to fix this issue, specifically vis a vis the IRS? Is this something that requires correction under EPCRS Rev. Proc. 2008-50, or is it a simpler fix?

Any assistance with this matter would be greatly appreciated. Thanks so much!

Here is a link to the IRS website:

The Fix Is In: Correcting Plan Mistakes - Correcting a Failure to Implement the Plan’s Automatic Enrollment Provisions

http://www.irs.gov/retirement/article/0,,id=212043,00.html

Hope this helps.

We have encountered a similar situation but in our case, our recordkeeper was supposed to notify us to enroll the newly hired employees and did not. So they are going to fund the corrective contributions. This does not seem right to me. I didn't think the recordkeeper could make contributions to a Plan. I thought that we should make the corrective contributions and they would reimburse us in some fashion. Am I wrong on this ? Aren't we ultimately responsible for the proper operation of our Plan ? Thanks in advance.

[K2retire]

We have encountered a similar situation but in our case, our recordkeeper was supposed to notify us to enroll the newly hired employees and did not. So they are going to fund the corrective contributions. This does not seem right to me. I didn't think the recordkeeper could make contributions to a Plan. I thought that we should make the corrective contributions and they would reimburse us in some fashion. Am I wrong on this ? Aren't we ultimately responsible for the proper operation of our Plan ? Thanks in advance.

You are correct -- only the plan sponsor is supposed to make contributions to the plan. It is also typical that recordkeepers will propose making the contribution directly rather than reimbursing the plan sponsor.