Failure to Remit Loan Payments

[Guest Jimmy B]

I have a client that failed to remit loan payments for several employees on 4 separate payrolls in 2000 and 2001. The former TPA did not notify them of this problem in either year, but adjusted the amortization schedules to reflect the missed payments. However, the payments were actually withheld from each participant's paycheck. Therefore, at least one of the participants has finished paying back the loan and actually made 4 payments too many (although those 4 payments were never made to the plan). Is this a prohibited transaction? How should this be remedied? Can the employer reimburse the participant for the 4 payments plus interest or does the employer have to make some sort of contribution to the plan? Thanks in advance!