Is this a PT?

[Guest 5500]

Profit sharing plan has in-service distributions. An error was made and a continuing participant was paid out more than the account balance. Employee is not a "disqualified person" but is a party-in-interest under ERISA. Mgmt. is planning on recovering overpayment from future plan contributions allocable to this participant.

Seems to me this a a PT for purposes of disclosure on the 5500. Am I correct? .

[JanetM]

IMHO, which could be wrong of course, unless this fellow is fiduciary, Key, HCE or somehow involved in managing the plan, you have a simple mistake not a PT.

Not sure where on 5500 or 5330 you would put that one.

[Guest 5500]

Janet, not sure I follow you. Participant is not a "disqualified person" so no 5330 needed. No problem I see from IRS standpoint.

But under ERISA, the participant is a party-in-interest. Don't I have a nonexempt transfer of plan assets or a loan to the party-in-interest? If so, this still goes on Sch G even if no 5330 is required.

[JanetM]

Opps, as I reread I see they are still working. First read didn't catch that. Seems you do have an issue. I would show in part 3 with the nonexempt transactions, loan of plan to PiI.

I would also make sure the fiduciaries in charge of this plan add on market interest for the time they have had the funds. That way they are not compounding their problem.