Deferrals not put into chosen funds

Employee signed up for 401k in June 2016. The appropriate deferral amounts were taken out of his paychecks. However, the funds that he selected were not set up. Hence, his contributions were just going into the default money market account, A year and a half later, he just notices this.

What correction must be done to make the account whole? Apparently the client had just notified the payroll company to start the deductions but never sent the enrollment form to the recordkeeper to set up the chosen fund allocations.

Thank you!

This could self-corrected under EPCRS assuming processes and procedures are already in place and being followed.  You would want to look at the difference between what he should have received had the money been invested as directed and the default money market amount.  Any investment gains would need to be deposited into his account.  If there happen to be losses instead, then nothing needs to be done.  You would also want to communicate this with the participant and of course put them into the funds actually selected. 

And make sure it didn't happen to anyone else!

Are you saying the default investment is money market? 

Yes, the default investment is the money market.

Consider a more appropriate default investment.

But I agree with Madison on the correction of the individual in question.