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while their may be other methods of correcting the problem, the one method clearly found under EPCRS Appendix B section 2.07(3) (3) Early Inclusion of Otherwise Eligible Employee Failure. (a) Plan Amendment Correction Method. The Operational Failure of including an otherwise eligible employee in the plan who either (i) has not completed the plan’s minimum age or service requirements, or (ii) has completed the plan’s minimum age or service requirements but became a participant in the plan on a date earlier than the applicable plan entry date, may be corrected by using the plan amendment correction method set forth in this paragraph. The plan is amended retroactively to change the eligibility or entry date provisions to provide for the inclusion of the ineligible employee to reflect the plan’s actual operations. The amendment may change the eligibility or entry date provisions with respect to only those ineligible employees that were wrongly included, and only to those ineligible employees, provided (i) the amendment satisfies § 401(a) at the time it is adopted, (ii) the amendment would have satisfied § 401(a) had the amendment been adopted at the earlier time when it is effective, and (iii) the employees affected by the amendment are predominantly nonhighly compensated employees. For a defined benefit plan, a contribution may have to be made to the plan for a correction that is accomplished through a plan amendment if the plan is subject to the requirements of § 436© at the time of the amendment, as described in section 6.02(4)(e)(ii). (b) Example. Example 27: Employer L maintains a § 401(k) plan applicable to all of its employees who have at least six months of service. The plan is a calendar year plan. The plan provides that Employer L will make matching contributions based upon an employee’s salary reduction contributions. In 2007, it is discovered that all four employees who were hired by Employer L in 2006 were permitted to make salary reduction contributions to the plan effective with the first weekly paycheck after they were employed. Three of the four employees are nonhighly compensated. Employer L matched these employees’ salary reduction contributions in accordance with the plan’s matching contribution formula. Employer L calculates the ADP and ACP tests for 2006 (taking into account the salary reduction and matching contributions that were made for these employees) and determines that the tests were satisfied. Correction: Employer L corrects the failure under SCP by adopting a plan amendment, effective for employees hired on or after January 1, 2006, to provide that there is no service eligibility requirement under the plan and submitting the amendment to the Service for a determination letter. .......... sorry, I can't recall if the latest updated EPCRS revisions that just came out indicated determination letters were still required or not.

The mutual fund company is mistaken. The regulatory requirements for non-safeharbor 401(k) match are different that those from Safe Harbor 401(k) Match. The Safe Harbor Match is a qualified employer contribution (the same as a QNEC, QMAC, SHNEC) and required 100% vesting at the time of deposit. A regular discretionary match is different. If you were to look at any preapproved prototype document, you can see the difference between the two written with the plan terms. HOWEVER, if for some reason the practitioner actually completed the vesting for regular matching contributions as 100%, then you would be precluded from changing that schedule for any employee with at least 3 years of vesting service. On prototypes, there are no areas to select vesting for safe harbor contributions as the vesting is hardwritten in the plan's terms. Hence, the vesting section is for the non-safe harbor match. Good Luck!

I rarely disagree by name but I disagree with Jpod on this one. Josh I agree you have every right to protect your interests. As such you should ask all the quesitons you need to determine you really were overpaid or not. But if you owe the plan money you should pay it. This is simply good ethics. I have been on both sides of this. I have made mistakes that have caused participants to be overpaid and underpaid. If I find a person is underpaid I work to get them paid. The reality is I could many times let ignorance be bliss tell no one I made a mistake and no one would know there was a mistake and an underpayment happened. I don't let it happen. I have made mistakes where a person was overpaid and was relieved when they agreed to repay the money that was a mistake. And yes you shouldn't have to pay taxes if the IRA returns the money to the plan via a trustee to trustee transfer.