Wrong Match Amended

[austin3515]

401k Plan includes ONLY SH Match. The document provider compelted an amendment in November 2014 (effective 1/1/2015) to exclude bonus from calculating the match (calendar year plan). The Safe Harbor Notice correctly disclosed that bonus would be excluded.

Come to find out that instead of checking the box in the Safe Harbor Match column, they check it in the Discretionary Match column. As noted there is no Discretionary match.

I'm curious to know what the thoughts are in terms of issuing a clarifying amendment. I am struck by the notion that this is a discretionary amendment, so perhaps I have until the end of the year to perfect the amendment (i.e., move the checkmark)?

If there was ever a case for a scriverner's error positon, I would have to assume this is it.

[Kevin C]

I don't see a clarifying amendment working in this situation. The SH Compensation definition is one of the plan provisions that satisfies a rule in 1.401(k)-3, so it can't be amended during the year. Even if it could, everyone has already earned the right to the 2015 SH match, so retroactively reducing it would violate 411(d)(6).

The way I see it, your options are to make the change effective 1/1/2016 or to approach it as a scrivener's error.

[austin3515]

of course scriveners error is where I was going. Thoughts on that?

[Belgarath]

I think if you submit this under VCP, you are likely to be unsuccessful for the reasons Kevin already mentioned. My vote is that the client is probably up the creek without a paddle. How much money is involved? If a big plan and a lot of money, they might want to engage ERISA counsel to see about a court approved reformation of the plan, or the combined "writings" that constitute the "Plan" being sufficient to ignore this error, but that's getting out of my league.

[Kevin C]

I can't help with the scrivener's error, either. But, before you go that route, I would look to see how likely the compensation definition is to pass 414(s). Maybe you'll get lucky and it won't pass.