401(k) deferrals exceed plan limit

[Guest SPOT]

Plan limits deferrals for plan year to 20%. We discover in 2002 that an employee exceeded the plan limit by $500 in 2001. I believe I need to have the excess adjusted for gain/loss distributed to the employee. Is this reported on Form 1099-R?. Does the ER adjust the 2001 W-2? Does anyone use the "creative accounting" approach that keeps the $ in the trust to offset the ER's next deposit?

Any guidence would be geatly appreciated!

[Tom Poje]

SPOT:

Try Q & A 106 (and 107) under the Q&A for plan defects

This will hop to that board where you can select the Q&A board

http://www.benefitslink.com/columns.shtml