A participant has made an excess deferral into the
employer's 401(k) plan for the 1999 plan year which
was just discovered. If a corrective distribution is
made now, will the distribution be subject to the early
withdrawal penalty assuming the participant is not
59 1/2 and is still working? Both the statute and the regs. seem to provide
that Sec. 72(t) does not apply but only when the correction
distribution is made on or before April 15 of the year
following the year the excess deferral was made. I am also
concerned that Reg. Sec. 1.402(g)-1(e)(8)(iii) says that
a corrective distribution made after the correction period
must satisfy 401(k)(2)(B). Does this mean that if the
participant is still working and is not 59 1/2, the cor-
rective distribution cannot be made?