EPCRS correction on payment of back wages?

[waid10]

Employer misclassified certain employees for FLSA purposes. So now back wages are being paid for overtime that was never paid during 2012-2015. It is not DOL or court-ordered back pay. Employer found the error on internal audit. Now it is correcting it itself.

I have several questions:

1. For the payments that are made now (2015), should deferrals be withheld? And match be processed? The plan defines comp as W-2.

2. Is EPCRS correction triggered for the prior years? After all, the employees were not paid the proper amounts. This means that the employees missed a deferral opportunity and missed a match on the missed deferrals. Or is the payment of the wages (and liquidated damages) in 2015 enough that correction of prior years isn't needed?

Thanks.

[waid10]

Also, it seems to me that if Employer processes deferrals and match on the back wage payments made in 2015 AND corrects for the missed deferral and match in the prior years, that the employees are getting the benefit twice. They would be getting a deferral/match in 2015 on amounts that should have been paid in prior years. And they would also be getting correction contributions to their plan accounts for the missed deferral opportunity and match.

Please help.

Thanks.

[Peter Gulia]

Is it feasible to apply each employee's actual 401(k) election that was in effect for each period in which the employee performed the overtime that is a subject of the late-paid wages?

If so, is it feasible to correct all W-2s and other tax and information returns for all affected periods?

[K2retire]

Will these back wages be reported on W-2s when paid or when they should have been paid? The answer to that question may shed light on this one.