Is reversion a prohibited transaction in the truest sense of the word?

[Guest SBlack]

I have discovered that a client of mine has reverted plan assets back to the employer. They claim that they "overfunded" the plan by estimating contributions throughout the year. After year-end, they simply write a check from the plan to the employer. Is this truly a prohibited transaction and if so, does it come with a 50% excise tax? Should they attempt to correct by putting those assets back into the plan? That would seem to compound the problem, but who knows? I would like to help put this client on the straight and narrow, but also minimize the correction costs. Please help!

[david rigby]

This plan sponsor is in need of some very strong advice from his ERISA attorney!