Withholding Too Much under Plan's Compsenation Definition

[Guest ggbrock]

The issue is that a 401(k) plan withheld 401(k) deferrals - and related match - on "compensation" that included bonuses, however the Plan's definition of compensation does not include bonuses. Therefore it withheld too much in 401(k) deferrals under the Plan's definition of compensation, and, accordingly, the match made was also incorrect. The amount of the bonuses is not very large, I don't think it would affect testing...but not 100% sure. This issue goes back a number of years. Example: withheld on $110,000 instead of $100,000, so 2% deferrals was $2200 instead of $2000, and 5% match was $110 instead of $100.

Has anyone dealt with this before? I was thinking to correct the 401(k) deferral should be treated as an overpayment in accordance with EPCRS's rules re overpayments in Section 6.06 (i.e., distribute excess amounts with notification that amounts are not eligible for rollover). What about the additional $10 in match? Should it become a forfeiture?

Thanks for your input.