Common use of Designated Xxxx Contributions Clause in Contracts

Designated Xxxx Contributions. Comments are also specifically requested on special issues relating to designated Xxxx contributions. For example, comments are requested on whether, if a plan failed to implement a participant’s election to have a designated Xxxx contribution made on his or her behalf, but instead a pre-tax elective deferral was made for the participant with the participant’s compensation reduced accordingly, would it be an appropriate correction for the failure for the employer to ask the participant whether correction should be made by a transfer of the contribution (with earnings) to a Xxxx account and inclusion of the amount so transferred in the participant’s compensation in the year of the transfer (instead of either (i) a similar transfer with a corrected W-2 for the year of the failure and the participant having to complete an amended return for the year of the failure or (ii) a similar transfer and inclusion of the amount so transferred in the participant’s compensation in the year of the transfer, but with the employer to make a grossup payment to the participant to make the participant whole for the resulting income tax). Comments are also requested regarding cases in which a plan fails to notify an employee of his or her right to elect designated Xxxx contributions, such as whether the correction for the failure described in the preceding sentence should also be applied in this case or whether some additional corrective contribution should be required to reflect the possibility that a participant’s decision to make an elective deferral might be affected by the availability of designated Xxxx contributions. See also section .05(3) of Appendix A and Example 3 of Appendix B, section 2.02(1)(b), for an illustration of correction for exclusion of otherwise eligible employees from being able to make elective deferrals, which applies without regard to whether the plan only permits pre-tax elective deferrals or whether the plan also permits designated Xxxx elective deferrals.