Employer deposited more into the salary deferral account than what was actually deferred

[Guest DCquestioner]

Client deposited more into the salary deferral account than what the employees actually deferred (as reflected on their W-2s, and salary deferral elections). Because the deferral was overstated, the safe harbor match was also overstated. How do you correct this?

[K2retire]

Although it was deposited to the plan as salary deferral money, because it was not truly withheld from pay it is an employer contribution. As such, both the excess deposit for deferrals and the match should be forfeited.

[Dennis Povloski]

Do you have to do an adjustment for earnings? If so, what method would you use? If the extra contributions were put in for multiple payrolls, would you pro-rate earnings?