Yes! You can use AI to fill out Empower Corrective Distribution Request Form

The form instructions specify a deadline of 2.5 months after the plan year-end (or 6 months for EACA/QACA plans) to complete corrections. Plan sponsors or TPAs often miss this deadline due to delays in receiving testing results or slow internal processing. Missing this deadline results in a significant 10% excise tax penalty on the excess amounts. To avoid this, set calendar reminders upon plan year-end and act immediately upon receiving the compliance testing notification from Empower.

The process outlines two distinct submission paths: electronic submission via the Plan Service Center for clients, or a separate 'Corrective Distribution Request Form' for TPAs. A TPA might mistakenly try to use the client's online portal, or a client might search for a form they don't need. This confusion leads to rejected submissions and processing delays, jeopardizing the ability to meet correction deadlines. Always clarify whether the plan is TPA-administered to determine the correct submission channel from the outset.

The documentation states that the request form must be authorized by a 'plan signer or authorized TPA'. Submissions are often rejected because they are completed by an unauthorized staff member or are missing the required signature. This halts the entire process, requiring resubmission and risking late penalties. Ensure the form is filled out and signed only by individuals officially designated with signatory authority for the plan.

A common point of confusion is the tax timing, as excess contributions from ADP/ACP tests are taxable in the year the excess occurred, not the year they are paid out. In contrast, returned ineligible contributions are taxable in the year of distribution. This misunderstanding can lead to providing incorrect tax advice to participants and confusion when the 1099-R is issued. Carefully review the type of correction to determine the correct taxable year and communicate it clearly to affected employees.

The entire correction is based on the excess contribution figures from the annual non-discrimination test results. Manual data entry errors when transferring these figures to the request form are frequent, such as transposing numbers or misplacing a decimal. An incorrect initial amount leads to improper distributions, requiring complex follow-up actions to rectify the payment to the participant. Double-check all figures against the official testing results before submission; AI-powered tools like Instafill.ai can help validate data entry formats to reduce such errors.

The system allows plan sponsors to override default settings for participant vested percentages and tax withholding, but this option is often overlooked. A sponsor might forget to adjust the vesting for a specific employee's situation or fail to apply a custom tax rate requested by the participant. This can result in incorrect distribution amounts or tax liabilities for the employee. Before submitting, actively review each affected participant's record to determine if any default settings need to be manually changed.

TPAs are often provided with forms like the 'Corrective Distribution Request Form' as flat, non-fillable PDFs, forcing them to print and complete them by hand. Poor handwriting can lead to critical data entry errors by Empower's processing team, causing delays and incorrect distributions. To prevent this, use a service like Instafill.ai, which can convert a non-fillable PDF into a cleanly typable form, ensuring all information is legible and accurate.

Plan sponsors may incorrectly categorize a required distribution, treating an 'ineligible contribution' (e.g., from an employee who joined the plan too early) the same as an ADP/ACP test failure. However, the rules for correction and the tax implications are different for each. This mistake can lead to incorrect forfeiture of employer matching funds and improper tax reporting for the participant. Always verify the specific reason for the correction as identified in the compliance testing results to ensure the right process is followed.

The request form requires specific participant identifiers like full name, Social Security Number, and account number to process a distribution. It's common for submitters to accidentally omit a piece of information or make a typo, especially when dealing with multiple employees. An incomplete or incorrect record for even one participant will cause their distribution to fail, requiring a corrected resubmission. Using form-filling tools like Instafill.ai can help by flagging empty required fields and validating data formats, ensuring a complete and accurate submission.