deferral issue

A 401k Plan Sponsor sent a  payroll file with deferrals for a participant  whose check was later voided.   So bottom line he had a deferral deposited into the plan assets on money he did not receive.  What is the BEST way to handle this as far as correcting the error?  It's a small amount - $9.75, but the platform wants $100 to correct it(move it to the administration account)..

Feedback please.  Thanks

Why did the participant give a check to the sponsor for a deferral?  

You mean the platform will charge $100 to make any correction?

You leave it there, and either call it a gain or use it for PS or match that would otherwise be contributed. 

It was probably the payroll check tot he participant that was voided.

3 minutes ago, Bird said:

You mean the platform will charge $100 to make any correction?

You leave it there, and either call it a gain or use it for PS or match that would otherwise be contributed. 

And maybe think about switching platforms.

1 minute ago, BG5150 said:

It was probably the payroll check tot he participant that was voided.

That makes more since than how I read it 

Is a new payroll check going to be issued?  If so, no harm, no foul, providing the employer does not send in the 9.75 again when the new check is issued.

If no new payroll check, the $100 seems a little egregious.  But who knows how the service agreement reads for corrections.....

Just leave it in the account and let the participant have it. Under Section 6.02(5)(c) of EPCRS (Rev. Proc. 2016-51), overpayments of < $100 ("small overpayments") are essentially self-correcting.

I agree with Luke.  Assuming this person is a nonHCE, just leave it there.  The Employer will have to fund it, but it is reasonable to take the position that the cost to correct far outweighs the significance of the mistake.

Yes the money was sent and then the payroll check was voided later.  No additional payroll checks will be issued.  He is terminated.  I vote for letting him keep it.  He is  NHCE.   The platform is AUL and I argued with them, but they said it's in the service agreement the  plan sponsor signed....arrgghhh

Thanks all!