401k deferrals on comp discovered 2 years late for termed ee

[WCC]

Client did an internal audit and discovered they owe compensation to a few terminated employees. The employees terminated two years ago. The client is now going to pay them for serivces rendered during the time of employement. This is not severance pay, they just did not pay them their full compensation.

The question is, do you apply the deferral election form that was in place? I don't think so because they are now termed??

Is there a corrective distribution that needs to take place? The compensation has not been paid yet, so I don't know what the correction would be. I don't think you have a missed opportunity correction.

Any thoughts?

Thanks

[masteff]

I'd say you're well outside the 2.5 months in the 415 regs for compensation paid after severance from employment and move on.