Ineligible deferrals- variation on a theme

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Employer excludes bonuses from its 401(k) plan definition of comp for contribution purposes. During 2000 employer inadvertantly permits deferrals from bonuses and matches these contributions.

The variation on the theme is that the employer has determined that if the participants' accounts are retroactively corrected back to the date of the error (the employer's recordkeeper has the capability of doing this) then (1) certain employees will have received a loan higher than they should have received (ie, in excess of 50% of the revised plan balance) and (2) other employees will have received hardship distributions in excess of the amount permitted under the plan.

If the employer corrects the improper bonus deferral (either by forfeiting the deferral and making the employee whole outside the plan, or by distributing the excess deferral), and forfeits the match, do the loans and hardship distributions need to be corrected as well?

Thanks-

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