Force out limit not followed properly - retroactive amendment?

A 401k plan document is written with a $1,000 force out provision for non-responsive terminated participants. The plan recordkeeper (bundled provider) processed force out distributions as if the document allowed for the $5,000 limit rule. 200 participants were forced to IRA's when they should not have been. This error happened within the last two months and was an isolated incident to these 200 participants. 

Rev Proc 2021-30 now provides more options for retroactive amendments pending certain conditions, one of which is (i) The plan amendment would result in an increase of a benefit, right, or feature.

Benefit, right or feature is not defined (as far as I know). My thought is that this error does not provide an additional benefit, right or feature. However, do others believe this can be corrected under SCP using a retroactive amendment to change the limit to $5,000? 

Thank you

I don't think that increasing the force out limit would be an additional benefit, right, or feature, since it would remove certain participants' rights (the right to defer their distribution).

I think you could treat this as failure to obtain participant consent to the distribution, and correct using the method in Appendix A.07. Basically, give them the option to repay the distribution back to the plan.

If you are still within the same plan year, doesn’t 401(b) simply allow an amendment to adopt the provisions now, but effective retroactively to an earlier date within the same plan year? Or are you arguing that an increase in the cashout limit would violate participants rights?

2 hours ago, John Feldt ERPA CPC QPA said:

Or are you arguing that an increase in the cashout limit would violate participants rights?

Ignoring, for the moment, the timing, there's certainly no anti-cutback problem with increasing the cashout limit - see 1.411(d)-4, Q&A-2(b)(2)(V).

4 hours ago, John Feldt ERPA CPC QPA said:

If you are still within the same plan year, doesn’t 401(b) simply allow an amendment to adopt the provisions now, but effective retroactively to an earlier date within the same plan year? Or are you arguing that an increase in the cashout limit would violate participants rights?

I'd lean towards this. Assuming they were notified of the pending cash-outs.

1 hour ago, Bird said:

I'd lean towards this. Assuming they were notified of the pending cash-outs.

Yes, they were notified timely/properly and my thoughts were similar to C.B. Zeller in relation to Rev Proc 2021-30. Thank you all for the comments, I will review 401(b).