Self correction

[ESOP Guy]

I have an ESOP client that in the 2/28/2011 pye give a person a contribution for the pye 2/28/2010 as a self correction. This person was a rehired in the 2010 pye who should have re-entered upon rehire and worked >1,000 hours. So they should have been given a pye 2010 contribution.

I have now found as we were estimating the pye 2012 contribution a person who was rehired in the 2011 pye who worked >1,000 hours. So this person should have been given a pye 2011 contribution.

So if one self corrects the same problem two years in a row that would seem to not work for self correction.

What is the risk? After all a VCP filing would demand the person be corrected exactly as we would self correct.

It seems like the risk is VCP might demand a fine be paid to avoid disqualification.

Any insight would be helpful.

[QDROphile]

What was the intended action after the first faliure to make sure the second did not occur? Some failures lend themselves to prevention by correction or installation of procedures. Some falures are simply human error, and you can't prevent recurrance. Some human error can be minimized in the future by education or admonition. I would not worry too much about these circumstances, because it seems almost like an enrollment oversight -- human error that cannot be absolutely prevented. The plan people have some explaining to do and some promises to make. Perhaps a specific item needs to be added to an administrative checklist in connection with determining contributions/allocations.

[K2retire]

It may also be a timing issue. Had the first correction been done before the second error occurred? If not, that makes a good case for saying that the procedures to correct happened after both errors.