TaxSaverPlan

Often, participants will make an error when filling out their election forms during open enrollment. In the past, the IRS had indicated that once the form is turned in and the first deduction is taken, there are to be no changes to the election amount without a qualifying event. However, they have recently indicated that there may be circumstances that would allow a Plan Sponsor to correct mistakes.

The example widely used is this: An employee signs up for a Dependent Care account, and submits health claims mid-plan year. The claims are returned to him. He calls his HR department and informs them that his only child is 22 years old. This is clearly a mistake of fact. The plan should adjust their records to show his dollars going towards a Health Account.

However, if an employee signs up for a Dependent Care account, and realizes mid-plan year that he is not eligible for the DCAP account because his wife is not employed, a correction would not be allowed. This is clearly a mistake of law, and there can be no change in the employees deductions until the next plan year.

If mistakes are made by participants, the Plan Sponsors can correct these mistakes as long as good clear facts can be documented and support the obvious error. These are examples. If a situation arises, please contact our office for clarification.