Return of Auto Deferral Contribution

[Guest SLBRB]

I have a participant who was late in turning in her declination in a plan with a 3% automatic contribution upon eligibility. The 3% was withheld from only one

of her weekly pays. I now have that opt out form and will return her deferral plus earnings as required. I have completed the redemptions within the proper 90 day timeframe and I'm ready to return the money to her. A few questions.. Can we charge her for this? Also, do I complete a 2012 Form 1099-R for this distribution and how is it coded? Or am I totally off base on how to handle this? Additionally, this employee has separate from service as well.

Thank you.

[Guest ghal]

It falls under code 2, "A distribution that is a permissible withdrawal under an eligible

automatic contribution arrangement (EACA)" see: http://www.irs.gov/pub/irs-pdf/i1099r.pdf