Ineligible Employee making 401K contributions

[Guest Ed Walker]

In doing year accounting I discover ineligible employee was allowed to make contributions. He was ineligible as he had not satisified a year of service.

I believe we can choose to give the money back or the employer can give a QNEC to each simularly situated employee. ( ie all with less than a year of service)

Here is my question: If we give the money back do we need to redo the employe's w-2 for 2002 and tell him to redo his tax return, or is there another alternative?

thanks for your input

Ed

[Tom Poje]

This was from the Q & A board. maybe a little dated, but probably still okay. (There is a lot of good info sitting on the Q and A Board, if you are not aware of it)

http://benefitslink.com/cgi/qa.cgi?databas...d=122&mode=read

the other item was

http://www.reish.com/practice_areas/Techni...ps/IRStip91.cfm

that was real recent