Mistakes
in elections
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.
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