Operational failure - incomplete wages calculation

[t.haley]

401k plan discovers during internal audit that one category of overtime was not included in total wages for purposes of calculating employee deferrals and employer match. Error began in 2009. I don't believe we qualify for self-correction of significant operational failure because we can't correct within the "correction period" (last day of second plan year following plan year for which failure occurred). Also don't think this is an insignificant operational failure because it affected all participants over 5 plan years. We don't have any figures on percentage of plan assets, etc. yet. We don't fall within any of the failures for VCP on the schedules. Should we just make the corrective contributions as a sort of self-correction and document correction and move on? Any guidance would be appreciated. Thanks!

[ETA Consulting LLC]

Keep in mind that when your situation does not fall on any of the schedules for VCP, it does not preclude you from filing VCP. You are merely using the Appendix C Part 1 for the filing; and writing (everything that happened, what you did not fix it, and the changes being made to ensure it doesn't happen again) out in long hand. Those Part II schedules merely streamline the filing process by spelling everything out (for those cases that are most common). Why this isn't one of them, I don't know. My purposes, without re-reading the new version of EPCRS, is to point out that you have the option of filing VCP, even when none of the Part II schedules are applicable.

Good Luck!

[t.haley]

Thanks for your reply. That makes sense. I knew there had to be a way to correct the error under EPCRS. It seems that our problem would be common enough to be listed on one of the VCP schedules. Thanks again!