Participant took a hardship withdrawal in 2008. The plan administrator forgot to stop the deferrals for 6 months.
What is the correction method for this?
I know the deferrals need to come out of the plan in 2009. How is he taxed? Is it taxed for 2009?
Does the excess deferrals get forfeited and the plan sponsor makes him whole outside of the plan?
Does he have to amend taxes for 2008 and the company amend taxes for 2008?
Is there a self correction method?
Are there penalties?
What about the match- does that get forfeited?
Does the money come out with interest? There probably was a loss on the amounts because of the economy.
Full Version: harship withdrawal
QUOTE (jkolsen @ Jun 10 2009, 08:35 AM) 
Participant took a hardship withdrawal in 2008. The plan administrator forgot to stop the deferrals for 6 months.
What is the correction method for this?
I know the deferrals need to come out of the plan in 2009. How is he taxed? Is it taxed for 2009?
Does the excess deferrals get forfeited and the plan sponsor makes him whole outside of the plan?
Does he have to amend taxes for 2008 and the company amend taxes for 2008?
Is there a self correction method?
Are there penalties?
What about the match- does that get forfeited?
Does the money come out with interest? There probably was a loss on the amounts because of the economy.
What is the correction method for this?
I know the deferrals need to come out of the plan in 2009. How is he taxed? Is it taxed for 2009?
Does the excess deferrals get forfeited and the plan sponsor makes him whole outside of the plan?
Does he have to amend taxes for 2008 and the company amend taxes for 2008?
Is there a self correction method?
Are there penalties?
What about the match- does that get forfeited?
Does the money come out with interest? There probably was a loss on the amounts because of the economy.
i would have them suspend for 6 months immediately.
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