Return of Deferrals to ineligible participant

[Guest Theresa Irvin]

401(k) Plan needs to return deferrals to ineligible participant. What is the best way to handle this?

[QNPG]

401(k) Plan needs to return deferrals to ineligible participant. What is the best way to handle this?

How are the deferrals ineligible?

[12AX7]

Assuming the Plan Doc does not take these matters into consideration, then take a look at EPCRS for more detail, but there are basically two options:

1. Amend plan doc to include the ineligible participant

2. Refund the amount with earnings

If the plan takes the EPCRS route, then look more into the details of these alternatives before implementing the process.

[Guest Theresa Irvin]

401(k) Plan needs to return deferrals to ineligible participant. What is the best way to handle this?

How are the deferrals ineligible?

The participant was not eligible to participant yet was allowed to defer

[QNPG]

401(k) Plan needs to return deferrals to ineligible participant. What is the best way to handle this?

How are the deferrals ineligible?

The participant was not eligible to participant yet was allowed to defer

Check out Rev. Proc 2008-50 (I think it is page 106) - Early Inclusion of Otherwise Eligible Employee Failure. This may help. You may be required to submit for a determination letter.