457(b) Plan and Reemployment of former Employeees

[oldman]

A municipality let go about 30 employees in July 2009. These employees sued for wrongful termination and won. Now municipality has to reinstate them as if they never left and pay them for all the back pay. Of those that were contributing to 457(b) deferred compensation plan, nine took lump sum distributions and one set up installment payment distributions.

Is plan required to restore participant accounts by allowing participants to payback distributions and adjust for any gain/loss? Also, would plan be required to withold for pre-tax elective deferral contributions from the judgement award of back pay?