Roth and pre tax contributions

[Nancy D]

Hi, I have a plan where a aprticipant signed up for ROTH contributions in 2012. The contributions were designated pre tax, contributed to the pre tax account and the W-2 reflects what happened. Participant is now asking Sponsor to "fix" the contributions to what she signed up for in the first place. Is it possible to make the correction now and issue an amended W-2?

Thansk for your help.

[ETA Consulting LLC]

Sure, if there was a bona fide Roth election. You will have to adjust the amounts in the plan as well. It's going to take some work to realign what should've been. I would keep clear documentation of the failure and the correction.

Good Luck!

[QDROphile]

From Rev. Proc. 2013-12:

Comments continue to be requested on special issues relating to designated Roth contributions. For example, comments are requested on whether, if a plan failed to implement a participant's election to have a designated Roth contribution made on his or her behalf, but instead a pre-tax elective deferral was made for the participant with the participant's compensation reduced accordingly, it would be an appropriate correction of the failure for the employer to ask the participant whether correction should be made by a transfer of the contribution (adjusted for Earnings) to a Roth account under the plan and inclusion of the amount so transferred in the participant's compensation in the year of the transfer (instead of either (i) a similar transfer with a corrected W-2 for the year of the failure and the participant having to complete an amended return for the year of the failure or (ii) a similar transfer and inclusion of the amount so transferred in the participant's compensation in the year of the transfer, but with the employer to make a gross-up payment to the participant to make the participant whole for any increase in the resulting income tax).

[Nancy D]

Thansk much for your help!!!