401(k) on ineligible nontaxable comp refunded - tax treatment

Non taxable fringe benefits - not eligible for 401(k) per plan comp definition but plan applied rate of 401(k) election and deposited it into the plan.

Amount has been refunded and 1099-R will be issued. Does this now become taxable income for year of refund?

Probably, if it's being issued under Code E for an EPCRS-related correction.