ineligible deferral/safe harbor match

[Guest Moira]

We have a plan that in 2003 (under a prior service provider and prior HR staff) somehow allowed an employee who had not reached eligibility to make deferral contributions and a matching contribution and a 3% nonelective Safe Harbor contribution were also made. We tripped over the situation because we saw an existing balance which came over in the plan transfer (the employee remains employed but has never worked more than about 700 hours in a year) but the employer did not for 2008 allocate the Safe Harbor contribution. The new HR person indicates she has "never worked enough hours" to become eligible and receive the contribution.

Given that this happened in 2003 and we are currently working with the 2008 plan year, where should we start to fix this? No Safe Harbor or other contributions have ever been made on behalf of this employee since 2003.

[Guest Jennk]

If this was a plan that was a takeover that I did not administer during that year, I would not touch it and just operate the correct way in the future.

[QDROphile]

You don't fix it. You notify the plan sponsor and plan administrator of the disqualfiying error and someone will instruct you about what to do.