Guest Ray Corneau Posted October 23, 2002 Posted October 23, 2002 One of my clients was delinquent in stopping pre-tax payroll deductions for a participant who took a hardship withdrawal from their 401(k) Plan in August. The client just realized the error. Thus, 4 bi-weekly payrolls were contributed to the participant's account. Can you please suggest some appropriate corrections on how to handle these payrolls that were erroneously contributed into the participant's account? Thanks!
austin3515 Posted October 24, 2002 Posted October 24, 2002 I should think you've done justice to the issue by merely distributing the monies to the participant, issuing a 1099-R for excess deferrals, which I don't believe is an excise taxable event. I've got no references, but it sounds reasonable... Austin Powers, CPA, QPA, ERPA
R. Butler Posted October 24, 2002 Posted October 24, 2002 http://www.benefitslink.com/cgi-bin/qa.cgi...d=110&mode=read See Q&A 110 in Correcting Plan Defects. 98-22 has been modified several times, but the principle here is still applicable.
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