Document correction

Plan is new comp, 3 classes.  Adopt Agreement allows allocation for each class to be:

i.  A percentage of Compensation

ii.  A fixed dollar amount

iii.  the greater of i. or ii.

 Plan design was always intended to be % or $ and plan has always operated with this type of allocation.  When preparing PPA restatement effective 02/01/15, we mistakenly checked box i. instead of box iii.

This error was missed when doing valuation for PYE 01/31/16 but caught now.  Please comment on proposed action of simply documenting error and correcting that page of Adoption Agreement.

How has the plan been operated?  If it has been operated consistent with "option iii" then you have an "operational" failure that can technically "only" be corrected by going back and fixing the plan by applying option i to the effective date of the plan, or to seek approval for a retroactive amendment via the VCP program.

Self correction isn't available to correct a scrivener's error.

Of course, if the plan has been operated since the effective date of the restatement consistent with option i, then make option iii available prospectively.

Of course, some may do as you suggest, but it would not be "technically" correct.  We wouldn't do that ourselves....

57 minutes ago, Cynchbeast said:

Please comment on proposed action of simply documenting error and correcting that page of Adoption Agreement.

Not the correct fix.  My experience is a VCP will most likely go your way since you can show it was a mistake but in the IRS' mind a VCP is the only fix.  Anything else and you risk the IRS disqualifying the plan 

Agree wotj MoJo and ESOP Guy. This is consistent with both the EPCRS Rev. Procs. as they have evolved over the years and experience in doing VCPs with IRS involving retro plan document correction.