Overpayment and excess deferrals

[BellaBee41]

Hello,

We had a salaried employee who resigned recently, but HR was not notified in advance, which caused the employee to receive a full paycheck in error. We are working on recovering the overpayment, but this employee also had Roth deferrals that has already been funded to his retirement account. Our record keeper suggested we remove the excess contribution from the participants account, which we plan to do.? I haven’t heard back as to how to employee is going to repay us (employer) back, but I’m assuming it is via a check. My question- is this something we should correct via payroll as well since we are reversing the contributions from his retirement account?

[Lou S.]

So too much ROTH was deposited to his account? If so remove the excess, use it to reduce the next company 401(k) deposit and you are done at least from the plan stand point.

You will need to correct the payroll so their year-end W-2 is correct. 

As for how you retrieve the over payment from the employee, I'll leave that to other folks to address.

 

[BellaBee41]

Thank you! Ok we will be removing the excess and it will go towards our forfeiture account.