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Practical Corrections 03: Allocation Mistakes for ER Contribs
Presentor: Derrin Watson Recorded Date: 4/12/2016 Duration: 60 Min.

This program was recorded during a live presentation given on April 12, 2016 at 12:00PM EST.

Web Series: Practical Error Correction and Prevention – A Focused Approach

Mistakes happen. Unfortunately, they happen all the time, even to well-run plans. Fortunately, the IRS has provided step by step guidelines to correct the most common errors. Sometimes, there are alternative methods to dealing with a problem and it can be confusing to determine the best approach.

This 6-parts Web Series will provide an in-depth approach to plan correction. Each week, we will look at a specific problem or set of related problems, consider how the errors could have been prevented, and walk you step-by-step through correction techniques. These programs will not provide generalized theories. Instead, each will focus on specific plan failures and how to address them on a day-to-day basis. Webcasts will include:

  1. Elective deferral failures: too easy to fail
  2. Plan document failures: fix them before the price goes u
  3. Allocation mistakes for employer contributions
  4. Distribution failures: too much, too little, too soon, too late
  5. Plan loan failures: even if the plan didn’t make a mistake
  6. Testing failures: ADP/ACP, 415, 402(g)

Practical Corrections Series 03: Allocation Mistakes for Employer Contributions

There are so many ways a plan can make mistakes in dealing with employer contributions:

  • Misapplying plan entry provisions
  • Errors in handling allocation conditions
  • Mistakes in computing compensation
  • Contributing too little or too much
  • Failure to follow plan formulas
  • Failure to apply top-heavy rules

Any of these mistakes can result in a participant being allocated too much or too little. Plan corrections can vary depending on whether the contributions are mandatory or discretionary. In some cases, the law provides for a choice in correction methods.

This program will address all of these failures and show permissible correction methods for each of them. There will be plenty of examples so you will see how the rules apply to specific situations. And, as always, there is time for your questions.


There are no prerequisites or other advanced preparation for this program. The speaker will assume attendees have a basic familiarity with the elective deferral procedures and EPCRS. Attendees should have one year of experience.

Level: Beginning.

Instructional Delivery Method
Group – Internet-Based

NASBA Field of Study: Taxes

Speaker: S. Derrin Watson, J.D.
Recipient of ASPPA's 2006 Educator of the Year Award

Objectives: After participating in this program, an attendee should be able to:

  • Identify the ways employers can make mistakes involving employer contributio
  • List and apply the approved correction methods available under EPCRS
  • Determine the best correction method for a given failure
  • Advise employers on avoiding future failures


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