Employer took pre-tax instead of Roth

[katie58]

What is the correction method when an employee elects ROTH contributions and the employer deducts the deferals as pre+tax?

Apparently, this has gone on for several years. The employee now wants his account corrected.

Has this happened to anyone else???

Thanks!

[401king]

It's very possible this correction is just of a payroll matter. The 401k records would obviously have to be updated, but it would just be switching its source to Roth from Pre-tax. The same dollar amount would have been withheld, and the same amount would be in the plan.

I don't know what penalties the employer may face for producing incorrect W-2s, but I imagine it'd be the participant still forking over the check to the IRS & State for taxes due (due to the higher income for each year). Maybe the employee would be less likely to insist on the correction if they knew they would have to pay (at least partially) for its resolution.

[masteff]

Apparently, this has gone on for several years.

You'll want to look over EPCRS. I believe you're looking a VCP filing.

[QDROphile]

Don't expect to find anything specific about your Roth circumstances in EPCRS. You will have to build on principles. The IRS asked for comments about Roth issues whe it published Rev. Proc. 2013-12. I agree that VCP is warranted, but check on the self-stated limits of VCP with respect to income tax issues that are outside of qualification matters.

[401_noob]

I think this is discussed on the bottom of page 13 of EPCRS.