401k refund for prior yr, 1099-R & taxable year

[TPApril]

Just wanna confirm - ineligible employee is receiving a refund of 401(k) for prior year.

As it is prior to 4/15 of the next year, they should treat the basis as income for the prior year, even though they won't actually receive the 1099-R (Code E) till after the end of the year of distribution.

The earnings on the ineligible contribution will receive a separate 1099-R and is taxable in year of distribution.

[Bri]

That doesn't sound right, as an EPCRS correction like this is all taxable in the year of payout.  

Answer would change if this were a 402(g) excess, though.