Missed Deferral Opp from 5 years ago.

[Rai401k]

A participant just discovered that her 401(k) deferrals have not been deducted from her paycheck since 2012. Our client has reviewed their files and agrees that they mistakenly did not deduct from her paycheck for that year. They are willing to make up and fund a missed deferral opp. from 2012. However she believes that they should be making up for all year since.

The client stated that they will not fund for 13,14,15 and 16 because they email employees every year requesting a new salary deferral form. This is part of their administrative procedures. Our client said that they have emails that clearly state that if they do not receive a new salary deferral form on Jan 1 of each year they will stop deducting and that the prior years form is no longer valid.

Questions:

1. Is there a statute of limitation of how long a participant has to bring up a missed deferral opp? Do they have to fund a QNEC for the missed deferral opp from 2012?

2. Aren't salary deferral forms, etc. administrative procedures? In other words, they can argue the fact that the emails they sent out clearly state that prior years form will not be valid and therefore will not need to fund a QNEC for 2013-2016?

3. Finally would we have to submit to VCP? I know there's a 2 year window for SCP, however isn't this considered a insignificant error so we can still self correct?

Thanks

[hr for me]

Based on admin procedures and the fact that the client can prove that the employee needed to fill out a new form every year, I agree that the mistake is only on 2012. Can't really answer the rest.