Ineligible participant deferring before entry date

[ajustice]

I have a highly compensated ineligible participant that deferred into the 401(k) Plan before her entry date.  EPCRS and the SCP say you can correct this by  a retroactive amendment if the participants are predominately NHCE's.  How do I correct it since this is a HCE?

[Bri]

Forfeit it to suspense, make her whole outside the plan. 

Or, issue a payment with code E on the 1099-R.

Or....if she was an NHCE in an even earlier prior year like 2017, retroactively make her eligible all the way back to THAT date and do whatever corrective contribution would have been needed for that year since she wasn't given the opportunity to defer.

(spitballin' - not sure that last idea passes the blink test!)

[Mike Preston]

Put the plan in a position that is as close as possible to where it would have been had the error not been made.  IOW, distribute the deferrals with earnings.

[justanotheradmin]

If the amounts were reported as deferrals on their W-2, distribute to the participant as a corrective distribution. 

If the amounts were not reported as deferrals on their W-2, then move it to suspense and deal with as you would any other deposit error.