I took out a 401k loan against a new home, and failed to make the payments in a timely fashion due to misunderstanding on my part and lack of address updating on the plan holder's part. My first indication that anything was wrong was after I received notification that the loan had defaulted.
After the default, our nearly useless plan administrators told me that the only remedy was to file for a VCP correction with the IRS. I gave the go ahead, and they sat on it for nearly a year. Then they came back and said I was ineligible for a VCP correction because I am a highly compensated individual.
I have tried to read the relevant IRS docs, and I can find nothing to support this. The plan administrators are stonewalling me saying that I could not possibly understand the complexities of the situation and I just need to believe them.
Are there compensation tests or other limits to who can file for a VCP correction?