Multiple Employer Plan - Excess Contributions

Have a multiple employer plan where one of the employers inadvertently contributed for an ineligible participant.  This was discovered in an audit, so the money had been invested and there was investment income.

So what happens to that income?  I believe the Fund can return just the contributions and keep that interest to use towards Plan expenses (self-directed accounts, so we know exactly what interest was earned).

Is that accurate?  Thanks everyone!

I'd say it all goes to suspense, contributions and earnings.  Company already contributed it, just mis-allocated it.

Exactly - employer contribution and income thereon gets forfeited. Plan document usually tells you what to do if an employee is mistakenly included or excluded.

On 2/4/2022 at 4:06 PM, Bri said:

I'd say it all goes to suspense, contributions and earnings.  Company already contributed it, just mis-allocated it.

Thanks everyone!  I just wanted to confirm, the investment earnings can be used as a forfeiture (more or less) and can be used to pay Fund expenses?  Just wanted to make sure before I reported to the Trustees.

I suggest following EPCRS.  The excess allocation goes into a SUSPENSE account and can ONLY be used to offset Employer contributions (not including deferrals). And, that no ER contribution may be funded by the employer until the account is exhausted.

7 minutes ago, BG5150 said:

I suggest following EPCRS.  The excess allocation goes into a SUSPENSE account and can ONLY be used to offset Employer contributions (not including deferrals). And, that no ER contribution may be funded by the employer until the account is exhausted.

This is a multiple employer plan.  So it would be for that one employer to use to offset contributions?