Correcting contribution errors in 403(b)(7) custodial accounts

[Guest RMassa]

Recently, I have been encountering difficulties with some 403(B) employer payroll submissions. Public school payroll departments and common remitters are occasionally making mistakes in their attempt to submit employee salary reduction contributions to 403(B)(7) custodial accounts. In these instances, contributions are made to one or more accounts in which the participants receiving them are not entitled.

The employer or common remitter subsequently explains that they made an error in their previous payroll submission. To correct the error, they

submit a new payroll for the current month with a negative contribution applied to each participant that previously received an over-contribution. However, only the participant or beneficiary of the custodial account can authorize the removal of money from the 403(B)(7) once it has been deposited.

Does anyone know what other mutual fund companies are doing in these instances?