@macuser_22 wrote:
Was the check payable to you personally or payable to your 401(k) plan.
A "restorative payment" to a retirement plan is not a contribution. Ask the plan administrator.
Revenue Ruling 2002-45
As best I understand it, "not a contribution" means that the employer (in the case of that particular ruling) can deposit money tax-deferred into the 401(k) and because it is not treated as a "contribution", it does not affect the employees' annual contributions maximums or implicate other rules about contributions.
The restorative payment could have been sent directly to the plan tax-deferred. The question here is what does the employee do with a check in hand? The plan trustee might accept it as money deposited into the plan (in which case this is "exception that proves the rule" that you normally can't just send a check to a 401(k).)
I guess you need to ask the trustee if they will accept a deposit (not a "contribution") of a restorative payment.
I think there is probably no way of putting in a separate IRA as a restorative payment unless you are already eligible to contribute to an IRA. To be a restorative payment, it has to go into the account being restored. If the trustee will accept it.
