Small Overpayments and EPCRS

[AJ North]

We have a situation where an revised ADP test was run, failed and excesses returned. The employer requested that we re-run this test based on revised compensation. The new results still failed, but the excesses were less than the first test. So now we have HCEs which received overpayments of excesses.

Where the amounts are less than $100, EPCRS indicates that the employer is not obligated to ask for those amounts back, nor even inform the HCE that they received any overpayment. If the employer does not make a full correction by requesting these overpayment amounts back from the HCE and making up the shortfall by making an unallocated contribution to the plan (operating under the less than $100 "rule"), I am understanding that the employer should file under VCP due to not making a full correction of the situation.

Can anyone out their share their thoughts and wisdom on handling small overpayments?

Thanks!

[FormsRstillmylife]

But you do not rerun the test after you have done the required corrective distributions. The required corrections do not necessarily cause the plan to pass.

Or did you have bad data and need to run with correct data?

[AJ North]

The client indicated that they gave us incorrect compensation figures, so the test was re-run. The test still failed, but the excesses that needed to be returned were less than the amounts returned from the initial test that was run several months ago.

I would guess here that the wisdon of re-running a test after excesses have been distributed would fill a separate forum.

Thanks.