Over-Deduction from Paycheck

[ERISA-Bubs]

We took too much money out of a participant's paycheck for 401(k) deferral. This happened twice.

Once the money was put into the plan, but we immediately realized it and corrected it (same year) by taking the money out of the plan and returning it to the employee in a later check.

Another time the money was not put into the plan, we realized we deducted too much and paid it back to the employee in a later check.

Are either of these a plan failure that require correction under EPCRS? They were both minor errors and both corrected soon after the mistake was made.

Any help is appreciated.

[BG5150]

As long as it was corrected w/in two years, I'd say it was eligible for self-correction.

But part of SCP is that you have to come up with and institute changes that would prevent the error form occurring again.

[rcline46]

I do not think this is a plan error. It is a sponsor or payroll provider error, but not a compliance or operational error in the plan.

[MWeddell]

If it is an operational failure (and it sounds like it is), then the EPCRS is the only guidance from the IRS on how to correct an error. I agree with the earlier poster that it sounds like self-correction most likely is appropriate.

There is no official category of "operational failures so minor that one does not have to use the EPCRS."