Excess Deferrals in two plans

[Guest lforesz]

We have a participant who worked for two companies and deferred more than $10,500 and has asked our plan to refund the excess amount. The amount we are refunding as excess deferrals was matched, but our counsel has told us that we do not need to forfeit the associated match as it is not a "plan correction" but a "participant tax correction" so that match should remain in her account. His argument is that she could have just as easily had us return the amount from the prior employer plan contributions (that were rolled over to us). However, we do not have the earnings information to do this calculation, so we are returning it from her deferral account instead. Any thoughts?

[RCK]

lforesz,

I don't have a code or regs reference for you, but I'd rely on the "what does the plan say" position.

Our main plan says essentially that to the extent that there distributions due to 402(g), 415, or 401(k)/(m), then the applicable matching contributions shall be treated as forfeirtures and reallocated.

RCK

[Guest lforesz]

Of course, the plan does not addresss the issue of any associated match. Alas, we are left to our own devices.

[Mike Preston]

General rule: don't argue with plan counsel. It does not nourish the soul.