Plan Termination - Short 401k Deferral

We had a client terminate their Plan and pay everyone out in September. We have discovered that one of the participants was shorted $5 on their 401k deferrals during the year while finishing up the last Form 5500. This deposit happened in March. How can we rectify this? Could they give the employee a $5 check? Deposit the $5 to the Plan and see if they will send them another check? I'm thinking they may take it all in fees if that is the case. The client wants to submit Form 5310 to receive a determination letter so I want to make sure it is handled properly.

You have a late deposit to the 401(k) Plan.

Deposit the additional amount along with earnings to the trust. If the trust is closed, they may have to go down to a bank and open an account in the name of the Plan.  I'd first ask the original custodian if they can and process the deposit and issue a residual distribution for the employee.

I agree with Lou, although it always does seem like the time involved is an absurd exercise. Was there any missed match associated with the $5.00? If so, the missed match, plus earnings, should be included in the correction. Maybe the correction will turn out to be a whopping $6.00 instead! 😁

It's been years since we had a client submit a 5310 upon plan termination, even though we always notify them of the option and make it their choice. No one here laments the loss of that process...

I missed that it was $5, I thought it was $5K. I mean technically my answer is still correct, but I'm not sure I'd go through the trouble for $5.