Employer Matching Contribution Exceeded Plan Terms

[waid10]

Hi. What is the EPCRS correction method for correcting the following error: employer's plan provides for a 4% matching contribution. Employer has been contributing an amount equal to a 6% match to participant accounts since the beginning of 2015.

Thanks.

[waid10]

It seems to me that Self-Correction is available since the error has only been going on during this plan year. Is it simply that the employer takes the excess contribution amounts back from participants' accounts? Are earnings also withdrawn?

[K2retire]

If they want to provide a higher match, why not amend the document to allow it?

[waid10]

If they want to provide a higher match, why not amend the document to allow it?

They don't want to provide a 6% match. The plan was amended effective 1/1/15 to reduce the match from 6% to 4%. The problem was that the payroll department never made the change in their system. So they kept matching at 6% by mistake.

[hr for me]

Have you weighed the cost of the fix vs allowing it to stand and just amending the document for this time period?

How many participants does it affect and what is the total cost?

Honestly I would consider amending the document for this year alone and then correcting it on an go-forward basis. Otherwise, you have a heck of an administrative/communication problem and you have to consider how you will deal with those that have already had that match distributed to them.

And as always, probably because I wear both hats at our companies, how did you get 10 months in before anyone in HR/Benefits noticed that Payroll hadn't been updated? Does no one check deductions/match on a pay period/monthly or even quarterly basis? Why not? I think you can blame payroll for the original mistake but then some responsibility needs to fall back to the HR/Benefits group, Finance/Accounting and possibly the recordkeeper if no audits are done on data being posted. Do none of them participate and see the match either on their paystubs, their online 401k accounts or quarterly statements, etc?