Ineligible employee contributions

Have an employee who in 2021 & 2022 made contributions to the plan but he is an excluded employee.   How would you correct, just refund 100% of his contributions and forfeit the match.  Would the distribution be  considered 2022 income since it will take place in 2022.  What about his 2021 W2 that shows his employee 401k contribution.  Does he just file as is?

Thanks

I believe so - the correction is under EPCRS, so the 1099 gets a code E which means taxable in the year of the refund, rather than the year the actual deduction was claimed for the deferral.