Employer made a 10% MPPP contribution for each of his plan's four participants (for plan year 2001)..... and then employer realized that the wrong amount of "eligible wages" was used for one of the employees.

The employee's "salary for entire year 2001" was $50,000 ....so the employer made a $5,000 [50,000 x 10%] for him. However, this employee did not enter the plan until 07/01/01. His salary during the period 07/01/01 - 12/31/01 was only $30,000. Therefore, only $3,000 should have been contributed for him.

$5,000 is presently sitting in the employee's MPPP investment account ..... but $2,000 of it was contributed in error.

How can the employer correct this ? Can employer simply order the financial instituition where the investments are held to take $2,000 form this employee's account and return it to the employer?

Moe: Read the plan document especially the provisions regarding the duties of the plan administrator. Should be a provision that the admin has the responsibility to review participant's account and correct any errors. Excess contribution can be designated as contribution for the 2002 plan year.