blown 403(b) limit

[waid10]

A colleague just realized that a mistake was made when an individual was enrolled in the 403(b) plan. The employee was enrolled in the "over age 50" catch up rather than the basic plan. For some reason, Information Systems had taken the cap limit off. So this employee has had money go into this for the last couple of years without regard to any annual limit.

I have 2 problems to cure: The employee has not received a match because his deferral was going into the wrong area. With the cap limit turned off, his deferral has been over the annual limit.

How do we handle this?

[mbozek]

Excess salary reduction contributions are taxed as w-2 income for the year in which they are contributed. The employer has to prepare a revised w-2 showing the excess as wages subject to income (but not FICA) tax. The employer has to make up the matching contribution for the prior years and deposit them in the ee's annuity subject to the limits under IRC 415 for 2004 ($41,000 or 100% of comp whichever is lower). Note: Salary reduction for over 50 ee was 12k in 02, 14k in 03 and 16 k 04 plus additional 3k for up to 5 years for employees of certain NP who have 15 years of service.