Roth deferrals made but not permitted in plan

[Trekker]

Participants have been making Roth deferrals for several years, but document provider was never advised to add the provision. Is there any way to correct?

Thank you for any thoughts.

[Belgarath]

IRS Revenue Procedure 2013-12 - VCP program.

[Trekker]

We did look at VCP but did not see this situation. Do you happen to know the section in RP 2013-12 that addresses this or a comparable situation? Thank you.

[Belgarath]

What you have is an Operational Failure (Plan was not operated according to its terms). This can be corrected by amendment, under VCP, as per Section 4.05.

You'll obviously have to consider other appropriate sections of the Revenue Procedure as applicable, for example, Section 6.05.

[jpod]

Was the plan not operated in accordance with its terms, or was the plan operated in accordance with its terms but the W-2 and 941 reporting and tax withholding were done incorrectly (i.e., income taxes were over-reported and over-withheld)? Nevertheless, I think the IRS could be very sympathetic to allowing a retro amendment to cure the problem via VCP notwithstanding what the Rev. Proc. says or doesn't say explicitly.