415 apply to double 401k deferrals?

[Guest rickw]

Employer has 5/31 FYE. We just discovered that an employee deferred 13,000 to 401k in December and then 14,000 in January. Then he got regular 25,000 PS contribution.

1. As long as 402(g) limit is not exceeded for calendar year, I assume it is ok to make two contributions in one fiscal year?

2. Does employer have a problem since the employee deferred 27,000 and got 25,000 regular PS contribution, exceeding 41,000? If so, what can they do at this point if all funds already deposited?

Help! Thanks!

[MWeddell]

There are several possible correction methods for the annual additions in excess of the Section 415© limit. However, the plan document must specify which method is used: the plan administrator does not have discretion in this regard. Of the plan documents I've read, the most likely correction method is to refund elective deferrals in excess of the 415© limit, but you'll have to check your own document.