Ineligible 401(k) deferrals

[Guest grazetti]

We have a plan where an ineligible employee made 401k deferrals back in October - December 2005. In 2006, we have forfeited the improper deferrals and instructed the employer to make the employee "whole" outside of the plan. The amount forfeited will then be used to reduce future employer contributions.

Does the employer need to revise the participant's W2 to reflect no deferrals for 2005?

[Archimage]

Yes.