Fifty state college and university employees were mailed corrected tax forms on the afternoon of April 15 – the very day they were due to the Internal Revenue Service and R.I.’s Division of Taxation.
R.I. Department of Administration spokesperson Karen Greco confirmed to Rhode Island Current that the state issued corrected W-2s because of excess contributions made for some employees’ 403(b) retirement plans – something that would have been blocked under the state’s old payroll system before transitioning to a new one late last year.
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Administration officials learned of the error in mid-March, Greco said.
“It took time to investigate if there was an error that impacted just one individual, a subset or all of 403(b) account holders, where that error occurred, and what needed to be corrected,” she said in an email. “Everything was confirmed by April 13, and they began the process of issuing the W-2Cs.”
An email from the Department of Administration sent at 3:30 p.m. on April 15 to affected state workers acknowledged the error with instructions about what to do next because overcontributing to a 403(b) can trigger double taxation.
“If you have already filed your taxes for 2025 and were charged a penalty, you will need to amend your filing based on the W-2C dated 4/15/26 to refund any penalties related to this issue,” the email obtained by Rhode Island Current stated.
Under a 403(b) plan, public sector and nonprofit employees contribute a set portion of their paycheck – typically alongside a larger employer contribution – into an individual investment account, often managed by a third-party firm. Rhode Island’s public college and university workers must contribute 5% of their biweekly salary if they opt into the retirement program.
Employees can make additional deferrals, but the IRS limits how much depending on their age and tenure.
Rhode Island’s prior payroll system automatically stopped people contributing when they reached their limit. Then the state adopted the Enterprise Resource Planning system.
The large-scale software infrastructure upgrade was finished late last year after a multiyear makeover that cost more than $90 million. But the guardrails that prevented overwitholding were not carried over to the new system.
“That could cause a worker to be penalized by the IRS,” Jay Walsh, executive director of the University of Rhode Island’s chapter of the American Association of University of Professors, said in an interview.
Walsh said he knew at least one URI professor who was notified by the state on Tax Day about receiving an updated W-2.
“In an ironic way, I think the person was relieved,” Walsh said. “Yeah, it’s unfortunate it came at this point, but it’s fixed now.”
Mikaila Mariel Lemonik Arthur, a professor of sociology at Rhode Island College and president of its faculty union, said she was aware of 10 employees who had tax returns noting they were facing penalties because of the retirement contribution errors.
“As unhappy as they are to receive another W-2, it is fixing an actual problem they are having,” she said.
Arthur commended the state for fixing the error by the tax deadline, but she thought the overcontributions could have been spotted sooner had the new payroll system gone online earlier in 2025.
The new system’s finance backend – for functions like managing contractors and vendor payments – went live in July 2025. The Human Capital Management and payroll modules followed in November 2025, among the last pay periods of the year.
“If the system had been implemented [last] March, we would have three-quarters of the year to fix these problems,” Arthur said. “The people at DOA worked hard to fix all of this, but they were not able to fix this before the tax year ended.”
The state had plenty of other tax-related errors to fix after the new payroll system went online.
In February, workers were mailed mislabeled W-2 forms with “State of Rhode Island Umbrella Company” listed as the employer visible through the return address window. At the time, the Department of Administration acknowledged the forms were additionally “populated with incorrect information” beyond the listed employer.
Around 18,000 corrected forms were mailed as a result of the errors, according to the Department of Administration.
Corrected tax forms were mailed later in February, but some may have had state employees’ Social Security numbers visible through the envelope. That mistake led to the firing of Department of Administration Director Jonathan Womer on March 6. The state offered credit monitoring to all state employees.
Department of Revenue Director Tom Verdi is serving as interim head of the Department of Administration as Gov. Dan McKee searches for a permanent replacement, though the position does not appear to be a priority for the governor’s office.
“Gov. McKee’s priority remains completing the ERP transition and supporting state employees as that process continues,” Olivia DaRocha, a spokesperson for the governor’s office, said in an email to Rhode Island Current. “Acting Director Verdi is providing steady leadership at a crucial time. Right now, that is the focus, and a formal search for a permanent director will take place in due course.”
Verdi’s tenure has also received a thumbs up from Walsh.
“Since Tom Verdi came on, we’ve seen more progress and things have been improving,” Walsh said.
The post-Womer era hasn’t been free of hiccups.
In late March, the state had to correct a $220,000 error after union dues weren’t withheld from 9,000 paychecks in February, WPRI-12 CBS 12 reported at the time.
The state in March also reissued around 4,500 tax forms because 403(b) contributions were in the wrong box on the corrected W-2s that were sent earlier in the month.
Then, on April 6, the state admitted it had miscalculated the data for state employees’ Health Savings Account contributions. That impacted around 1,000 state workers, according to data provided to Rhode Island Current.
Since the first round of reissued tax forms in February, Greco said the administration department has issued about 5,600 corrected W-2s.
Because of the ongoing payroll issues, the Rhode Island AFL-CIO has called on McKee’s administration to reimburse state employees who had to refile their taxes.
“I was in touch with the state over the weekend and yes they’re working on it,” AFL-CIO President Patrick Crowley said in a text message.
Christopher Shea is a staff writer for the Rhode Island Current.
