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Contribution classification correction


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I have an issue where a 2023 contribution that was intended to be made as an employee contribution was erroneously made as an employer contribution (due to a new employee being unaware of the correct forms to use). Can this contribution be recharacterized as an employee contribution? If so, would we use ECPRS or VCP?

Thanks!

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Could you be a little more specific about what actually happened? Was there an employee deferral that was inadvertently deposited to the wrong "bucket" and treated as an employer contribution? Etc.? Without knowing any facts, I doubt VCP would be required.

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Yes, the treasurer fills out the ACH forms for both employer and employee contributions. The intent was for the Employee to contribute $10k and the employer to contribute $6k. The new treasurer made a mistake and only submitted a 10k employer contribution in 2023. The company just caught the mistake and would like to reclassify/ recharacterize the either the whole or part of the 2023 $10k employer contribution to be an employee contribution. 

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  • 2 weeks later...

You should be able to correct a clerical error, but I would need a much more detailed explanation of the facts to conclude that that is what happened and what the appropriate correction would be.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

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