Excess Deferral Correction

[Guest Jill B]

Hello Everybody,

I have an interesting situation. A participant made his deferral contribution for plan year 2008 twice. We had not discovered it until AFTER his money was distributed out of the plan and into an IRA.

This deferral amount plus earnings (or, in the case of this year with negative earnings, we net the two), is now taxable. He distributed out in November of 2008, so my calculation of earnings goes from when the money was deposited in to when it was distributed (1/24 - 11/18).

My question is, once it moved to the IRA, do we need to do anything to correct it there? It is not pretax money. Do we need to inform the broker? Do they need to recatagorize it?

Thank you for your help!