We had one employee who was erroneously excluded from a profit sharing contribution from 2006. (He was a rehire and his previous service and participation was not taken into account upon rehire.) The total contribution is a fixed amount each year and it is allocated as a percentage of compensation with adjustments made for highly compensated employees. All employees who receive a contribution also recieve a share of forfeitures, allocated the same as the annual contribution. Our plan document says correcting omissions can be done through an additional contribution and/or using any available forfeitures.

We have read Rev. Proc. 2008-50 but it is still unclear on how to fix this and if any further action (amendments to returns, changes to others' balances, etc) will be necessary. This does seem like an insignificant operationsl failure but we are not sure.

Any advice?

One year, one participant. Probably a very small amount of the plans assets and contributions involved. If you correct rather quickly, yes, I think this would likely be an insignificant operational failure under Rev Proc 2008-50, section 8.02.

Given that your plan document permits correction of omissions through additional contributions, or application of forfeitures, I do not think you change others' balances. Nor should you need to change any returns; the employer will take the deduction for an additional contribution for the year in which actually made as part of the correction. As for the Form 5500s involved, if accrual method is used you might need to adjust.