MarZDoates Posted June 12, 2003 Posted June 12, 2003 Employee took a hardship withdrawal from his company's 401(k). The employer neglected to suspend deferrals. What is the procedure for fixing this problem? (i.e. return deferrals, etc.) Where would I find the citation to back up the answer. Thanks. QPA, QKA
kocak Posted June 14, 2003 Posted June 14, 2003 I would check EPCRS, I think there are suggestions for this type of situation, including reducing the participant's account and adjusting the next payroll, refunding the contributions with earnings, possibly even starting the suspension now. The latest EPCRS procedures are outlined in Rev. Proc. 2003-44.
Harwood Posted June 16, 2003 Posted June 16, 2003 The IRS has never given any written guidance on what to do when deferrals weren't stopped. Be careful. None of the options are very appealing. The ERISA Outline Book gives some pros and cons of various approaches.
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