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Showing results for tags 'overpaid employee'.
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An employer accidently paid a former employee a paycheck when no wages were due and deferrals were also withheld from the paycheck and deposited into the plan. The can get the net paycheck back and they are able to offset the taxes withheld with their next tax filings, but they are not sure what to do about the "deferrals". Technically the real paycheck is zero and thus no deferrals should be possible. Can the plan distribute these "deferrals" back to the employer without triggering and excise tax? Or, should the amounts be held in the plan under a suspense account until the next contribution to the plan is made, and offset that contribution by the suspense account? Any other ideas for handling this?