ADP Failure

[perkinsran]

Any idea what you are supposed ot do when you file under VCP for an old ADP failure and some HCEs received too much from the original tests. The rules are pretty clear if you need to do an additional refund but I can't find anything on the excess.

[Mike Preston]

What would you propose? It seems pretty clear to me that unless there was some sort of abuse with respect to the fact that the monies were paid out of the plan (which is a bit hard to imagine) the "correction" is to tell the IRS that too much was paid out.

[perkinsran]

That would make sense but who knows whether the IRS would consider the intital excess to be an impermissible in service distribution. CLient's TPA did test wrong since 2005. The TPA is doing the retesting and some people recieved too much and some too little. We suggested they correct through VCP for the people who did not receive enough refunds, but did not know if anyone had experience with the "too much paid out" scenario.