'Apparently, I Was Zero Years Old' — Employee Discovers Payroll Error That Blocked Their 401(k) For Years

Core Insights - A clerical error in an employee's hire date led to their payroll system incorrectly categorizing them as a newborn, preventing them from contributing to their 401(k) plan for years [2][3] - The employee, aged 47, repeatedly inquired about their 401(k) contributions but was misinformed that enrollment would occur automatically [2][3] - The situation highlights the importance of employers conducting annual compliance reviews of their 401(k) plans to verify employee eligibility [4] Compliance and Correction - The IRS mandates that if an eligible employee is excluded from contributing to a 401(k), the employer must rectify the situation by making a qualified nonelective contribution [5] - The corrective contribution typically equals 50% of the amount the employee would have deferred, along with any lost earnings and matching contributions that would have been owed [6] - If the error is identified quickly, the IRS may permit a smaller correction under certain safe harbor rules [6] Employee Guidance - Individuals in similar situations are encouraged to be proactive in verifying their 401(k) enrollment and contributions [4][7]