excess compensation and benefit calc

[Guest latwz]

ER paid in last paycheck a small amount of excess compensation. If the employee does not repay the excess, does the ER have to take that comp into accout for benefit calcuation purposes? My research indicates that they can ask for it back, but I find nothing else. I assume it is pay of w-2 compensation and that it is counted. Any thoughts? Thank you!

[JanetM]

Off the cuff, if the employee doesn't repay ER then it should be reported on W-2. If plan uses W-2 comp for benefits then seems to me it would be counted. Haven't researched the issue so I could be wrong.

[Mike Preston]

If it wasn't payable as compensation, then payroll records should be revised and the employer should reflect any overpayment as an asset due from the employee. No way do you count improperly paid monies as W-2, you just have to correct it properly.

If the employee never pays it back, it is like any other bad debt of the employer. Write it off or go after the recalcitrant in court.

[JanetM]

Good point Mike, I stand corrected.