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Posted

What is the right basis for correcting an MDO for automatic enrollment?  50% of the ADP, or the pct of the auto enrollment?

Here it looks like it would be 50% of the auto enrollment pct:

https://www.irs.gov/retirement-plans/fixing-common-plan-mistakes-correcting-a-failure-to-effect-employee-deferral-elections

Our situation: elections are made on our recordkeeper site, and transfer over to our payroll system.  Due to human error, some elections were not transferred.  These non-transferred errors include automatic enrollments as well as positive elections.  

It seems to me that all these participants were given the option to defer, as they received info from the recordkeeper and were directed to the site.  As they were given the opportunity, this 401k plan fix would not apply:

https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide-eligible-employees-were-not-given-the-opportunity-to-make-an-elective-deferral-election-excluding-eligible-employees

Thanks in advance for any comments!

 

Posted

When did the failure occur? There is a special correction for auto enrollment failures that is 0% as long as the correct deferrals start within 9½ months after the end of the plan year, and a notice is provided.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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