Hi, welcome to Just Answer.
Thanks...the transmission fluid is serviceable and should be drained and filled every 30k miles. There is special procedures and equipment to service the fluid and check it's level; which is commonly done at the dealer. At 120k if the fluid has never been serviced, it may very well be bad and this can lead to premature failure of the transmission. The first step is to remove the transmission oil pan and check to see if there are any signs of metal shavings in it...this will entail mechanical failure inside the transmission that will require an overhaul. If there is no evidence of metal, you may opt to change the filter and transmission oil and see if the problem continues. If so, the transmission will need fluid pressure tests to evaluate what has failed, and if it requires a partial or complete overhaul.
If it comes down to a transmission overhaul, you may consider a used transmission for around $1500 on a average replacement. The only downside to that is most shops only offer a 60-90 day warranty on the used transmission and every so often you can get a bad one.
If the check engine lamp has also come on since the slippage began, the first step is to have the powertrain module scanned for diagnostic codes. There is a possibility this sound be a electrical failure, or mechanical failure of the electrical shift solenoids.
A typical filter and fluid service at the dealer is around $350-$380. Most dealers will not install used transmissions, so the best place to get that done would be an independent VW shop.