Matching on the incorrect source...any ideas?

Hello, newbie here (but long time reader 🙂)

I've run into a scenario where individuals were matched on Catch-up contributions when they should not have been. This has happened for a couple of years and was recently discovered when investigating another issue. Anyways, the good part is that the payroll system has a cap on the match so no one was overmatched. We perform a true up every plan year (early the following the year) and deposit true up amounts early in the following year for the prior plan year. 

My concern is that our plan document explicitly states match is not calculated on any catch-up contributions. While no one is getting more match than they are entitled to, what does this mean from a compliance standpoint? Amounts matched on the catch up should really be included in their true up. These are folks who already maxed out at 19,500 and their match should have stopped (and then that's where the true up comes in to play)...but instead the payroll system started calculating match off of their catch up, which, per our plan documents, is not an eligible source for match.

Any ideas on if we need to correct this and what that correction might look like? Thanks!

Not sure I understand all the facts, Benguru25, but it sounds like your only problem is that what was actually done, while it was within limits, was inconsistent with the plan document. Failure to follow your plan document is a disqualifying operational error. To fix under EPCRS, you could either scrape back the erroneous contributions or amend your plan retroactively to conform to its operations, if the group receiving the additional amounts is nondiscriminatory. Whether you can fix through self-correction or must make a VCP submission to IRS depends on exactly what "a couple of years" means.