Employer missed a deferral

[Belgarath]

Just ran across an interesting situation.

Employer missed withholding a deferral here and there on several employees. They understand they have to make full missed match plus earnings. However, their correction on the missed deferral piece has been as follows:

They have simply withheld the missed deferral at a later date (anywhere from next paycheck to several months later).

I think in "real life" this is acceptable IF the employee does a separate written election to permit it. However, I don't think it is acceptable to do it 6 months later without a written election. Don't know if they have even gotten VERBAL approval, but apparently no one has ever complained.

How do y'all see this situation handled (if you ever do see this correction method) when the correction falls outside the "normal" SCP corrections? Just curious.

[Eric Taylor]

Belgarath,

Sorry, I don't have particular experience with plans correcting informally along those lines but agree with you that it may work ok as a practical matter as long as participants approve of this.  Seems that is sort of along the lines of the new 2015-28 philosophy of 0% QNECs if the issue is corrected quickly enough--i.e., participants can basically make up the lost opportunity by deferring more from later amounts.  I'd worry about doing it much after the fact though as well as doing it without some full notice and approval, etc.  Seems you probably start getting into potential wage and hour issues and complicated payroll overrides, etc. with some of that.