correcting noncontribution check deposited into 401(k) plan

[TPApril]

Small dividend check under $25 deposited into 401(k) trust instead of non-retirement account. Minor, we think, but goal is to correct.

Recommended approach - leave in plan, treat as current year contribution, and have plan sponsor write same amount into his other account from his personal checking

Plan sponsor's preference - withdraw amount and transfer directly into correct account

Just contemplating best approach.

[ESOP Guy]

In those situations were the amount is so small we tend to leave in plan and just net it out of the next regular deposit. 

[jpod]

I think it's a mistake of fact contribution, so you could take it out.  Your approach would work too but if terms of plan limit contributions to cash only is this a "cash" contribution? 

[RT]

We have had similar situations, and the correction was to move the deposit to the suspense account and use it to offset future contributions. By leaving it in the participant account, the Plan Sponsor is essentially pre-funding a deferral. 

[Mike Preston]

That is not responsive to the question at hand.

[Bird]

I would take it out.