Corrective distribution

[Guest KRS401k]

We took over as a plan's TPA in July of this year.

The plan sponsor received a letter last week from the previous carrier stating that it passed tesing for 2007. There was one fix that has to be made because a participant's contribution from May 2007 was overmatched because the participant had taken a hardship and the deferral portion was returned, not the match. So $133.17 is supposed to be paid back to the company from the participant's match account.

What needs to be done regarding 5500s:

Does the 2007 5500 have to be ammended to reflect the change in employer contribution?

On the 2008 5500 would the $133 show on Schedule I line 2f?

Both?

Any other suggestions would be appreciated.

Also, would anyone know how to reflect this on the employer's tax return?

Thanks!

[K2retire]

Ordinarily the match would be forfeited, not returned to the employer. That should solve all of your other issues as well.

[JanetM]

I agree, forfeit the match there is no reporting. Assuming the plan allows for forfeitures.