Late ADP Refund ?

[Guest jvandyke]

We have a plan, 6/30 year end. ADP refund was issued and check cut August 2009, prior to 2 1/2 month deadline. We were just notified that this refund check is still outstanding, HCE never cashed it. We are currently having the check re-issued to the HCE. Would you consider this a late refund and the plan subject to the 10% penalty?

Technically the refund check was issued in time, and all funds have been liquidated from the participants account, however the check was never cashed.

Thanks for all input.

[austin3515]

a) The refund WAS processed

b) The HCE had "constructive receipt" and therefore owes the taxes for the year in which the check was received.

So I think you are OK.