Distribution of Deferrals on Post Severance Comp

[Vlad401k]

We have one participant who was terminated during 2015 and received a large severance check. He had deferrals withheld on that check even though he was not allowed to (since he's no longer a participant). How do we handle the distribution of these excess deferrals in the plan? Should we simply use code "8" and have the amount distributed be taxable for 2016 or do we need to use code "P" for the amount contributed (taxable for 2015) and code "8" for any earnings (taxable in 2016)?

[Lou S.]

I would refund it as a 415 excess under the theory that it was differed from pay not eligible under 415 and follow those rules for 1099-R coding and year taxable. But I could have an incorrect view on this.

[Vlad401k]

Lou,

So, what you're saying is that it should be code "8" as it's distributed in 2016 (even though the excess occurred in 2015)?

Any other opinions on this distribution? I would tend to agree with Lou on this, but would like to see what everyone else thinks.

Thanks.