Excess Employer Simple contributions for 2003 & 2004

[Guest Russell]

We have an employer with a Simple plan and just found out from their accountant that they contributed significantly more than the 3% match for 2003 and 2004. They have actually matched the exact dollar amount that each employee contributed, which is much higher than 3% of pay for most of them. How do they go about correcting this (especially for 2003 since it was not found until now) and what type of penalties might they incur? Also, what is the effect on this if an employee has quit and taken a full disbursement?

Thank you for any help....

[Guest Gordy]

Reference Rev. Proc 2003-44 section 6.10. Also reference Sal Tripodis ERISA Outline Chapter 12 Section V Part G 12. Note the last sentence of 12(a). Looks like a VCR component filing under EPCRS.

Sal has a reference to the income tax effects.