EPCRS - deferral correction

[Guest Rags]

Client deferred more money than employee requested. When returning excess money should earnings be given?

Doesn't seem to be addressed in Rev. Proc. 2008-50.

My thoughts:

EPCRS attempts to make employee whole, as if error had never occurred. If earnings loss then return principal amount. If earnings gain, then include earnings.

Please provide citations.

Note: this is not a 402(g) or 415 issue. Company just didn't follow admin procedures.

[Guest Sieve]

Earnings stay with the plan, either as allocations to all participants or with the employee. To do otherwise would be to benefit the employer directly from plan assets, a prohibited transaction. See similar discussion here: http://benefitslink.com/boards/index.php?s...ic=42207&hl=

[jpod]

Why is there a need to take any money out of the plan? Just take the excess money (including earnings) from the employee's account and use it for other plan purposes (e.g., employer contributions, plan expenses), and employer reimburses employee out of it's own pocket. Alternatively, reduce employee's future contributions until excess contributions are reduced to zero.