We have discovered that a client put in too much safe harbor match (SHM) into a participant's account for 2006, probably because they didn't pay attention to his compensation amount (he made $330,300 for last year). They use the regular SHM formula and this participant contributed $15,000 in deferrals. I am ok with his deferrals, but they deposited $12, 004.04 in SHM (after his rec'ble for 2005), and he shouldn't get more than $8800 (to top it off, the client reported this participant's match to be $13,285.20).
The excess will need to be removed from his account, and after speaking with John Hancock about how they would like to handle this issue, they sent me an excess withdrawal form. I don't think this is correct. The money shouldn't be returned to the participant, it needs to go back to the company, or at least held at JH to use towards the next safe harbor payment they need to make (they make them during the year).
Thoughts?