refund of excess 457(b) contributions

[mbozek]

Can a 457(B) plan provide for removing excess contributions from a 457(B) plan for a np before end of tax year? Eg. at end of 2002 total ee and er contributions exceed the $11,000 limit. Reg. 1.457-2(e) states that the plan must provide that the amount of the deferral must not exceed the 457(B) limit. Existing regs fro correcting plans under 1.457-2(l) do not discuss failure of NP plan to comply with regs because they were written before np became subject to 457. Could the excess amt be returned to the employee by end of taxable year since it is not deferred? I am assuming that 457 plans like 403(B) plans are not required to be administered in accordance with their terms- they must only comply with the law, eg. amounts held under the plan cannot exceed 457(B) maximum. Therefore (1) are all deferrals under the plan taxed because the plan becomes an ineligible 457(f) plan if the deferral amount is exceeded, (2) is the excess treated as an after tax contribution subject to taxation in year of contribution but can only be distributed as provided in 457(B) or (3) can excess be refunded to employeebefore end of year of contribution since it is taxed as wages and not deferred?