402(g) Exceeded - Gain/Loss

[Vlad401k]

A participant in one of our plans contributed over the 402(g) limit for 2015. We're working on doing a distribution of the excess right now. How would you calculate the gain/loss? Would you consider the date when the deferral first exceeded the 402(g) limit as the start date and the date of distribution as the end date for gain/loss calculation purposes?

Also, there were SafeMatch contributions associated with these excess deferrals. Do you calculate the gain/loss for those as well?

[QDROphile]

The plan document may have terms that specify how to deal with an excess, based on provisions of the tax code. EPCRS guidance says that if the code provides a correction method, then that method applies. The EPCRS guidance also says that a failure cannot be corrected by an action that would cause another failure. Failing to follow plan terms is an operational failure. What you might find is that the correction provisions speak to corrections after the end of the year and your question will become whether or not you can do something else if you find the error and correct before the end of the year.

[Tom Poje]

I realize you are correcting timely so EPCRS doesn't apply, and these answers are a bit dated, e.g.GAP income no longer applies (though you wouldn't have that anyway) and obviously the name of the correction program has changed but they provide a good walk through for how to calculate gains and different possibilities. I believe they are still applicable. as for the safe harbor match, I think similar logic applied (amount is forfeited)

of course any plan documentation applies first.

http://benefitslink.com/modperl/qa.cgi?db=qa_plan_defects&n=108
http://benefitslink.com/modperl/qa.cgi?db=qa_plan_defects&n=109