A few months back, I was working with a 401(k) plan sponsor on a big Voluntary Compliance Program (VCP) issue. The issue was simple, the latest plan restatement (since 2019) improperly included bonuses to the definition of compensation, which was inconsistent with the terms of previous plan documents.

Rather than amending the plan going forward and self-correcting with qualified non-elective contributions (to make up for missed deferral opportunities) and makeup employer profit-sharing contributions for the bonuses, I decided to roll the dice. I asked the Internal Revenue Service (IRS) through the VCP application, whether they would accept a retroactive amendment to exclude bonuses. I wasn’t 100 percent certain that the IRS would approve it, but they did. I reasoned that when it comes to correcting issues, you never know whether something will be approved unless you ask. I always find that people aren’t mind readers and you need to just simply ask. Thanks to just asking, the plan sponsor limited how much they needed to spend to correct the problem, they didn’t have to outlay more in contributions to fix the problem.e to outlay more in contributions to fix the problem.