There are many threads on this topic but I cannot find the answer to my specific question:
Participant takes a hardship 7/1/2012. Deferrals continue. July 2013 the auditor informs the sponsor that the deferrals for the six months immediately following the hardship must be returned. Vendor sends a check to the sponsor for the deferral amount and says "make the participant whole via payroll".
Question: Logistically how does the correction via payroll happen? If the sponsor amends the participant's 2012 W2 then they also have to amend their quarterly tax filing and the participant has to amend his 2012 personal taxes. Is this really the only way to make the participant whole?
I am thinking the answer to my second question is yes, but thought I would ask.
Thank you