A participant takes a hardship distribution from a plan that has a six-month suspension period during which he or she cannot make deferrals. What is the appropriate correction procedure if the participant's deferrals are not suspended during those six months?
Rev. 04/14/05, E-mail Alert 2005-7

If the six-month suspension period is not enforced, the amount deferred must be forfeited to the plan and the employer must “make the participant whole” outside the plan. That means the employer must reimburse the participant for the amount forfeited.