cbadmin123

Sorry all. I didn't realize I wouldn't receive notifications with the replies. Thank you for all of your responses. The termination example from Larry puts it into perspective. I have another question along the same vein... In the case if it isn't a 402(g) issue (ex. there was an admin error of overdeducting like an employee changed from 10% to 2% but employer deducted 10% for a few pay periods, and the employee is still under the IRS annual limit). If the employee was notified and the requested to keep the deductions in his account rather than distributing it - would this be passable as a correction? We've documented corrections and controls to the process moving forward to avoid further issues.

Hello - I have an instance in which an employee met their annual limit for 401k, but the payroll was configured incorrectly and it deferred once more beyond the annual limit. RK says 402(g), but with the market how it is, it doesn't seem fair the employee would take a loss on their excess distribution since it was employer's mistake. Is there an alternate solution? I was thinking about reversing out the excess deferral plus earnings/losses through the plan and reversing the deduction through payroll so it's taxed properly for the employee. Any advice is appreciated.