correction method for distribution from deferral account

[k man]

client has a 401(k). a distribution was made to an HCE of amounts attributable to his deferrals. he has not attained 59 1/2 and there is no hardship. what would the proper correction method be? i cant find it in the revenu procedure.

[Guest rhp]

In a case we had, the IRS agent stated that paying the distribution back--plus earnings--would be the only acceptable correction in an unauthorized in service distribution case involving an HCE. Also, you will probably need to file under VCP.

[k man]

i dont think we are going to request service approval. but i think the deferrals plus earnings is the best method.