Can terminated participants make contributions to 401(K)?

[Guest fran29]

Can recordkeepers accepted contributions from a terminated participant? If the plan sponsor sends contributions for a terminated participant can a recordkeeper accept it, or does a refund have to happen?

[MWeddell]

In general, the answer is no.

Deferrals must be made from compensation received as an employee. While the IRS guidance could be more clear about it, in general allowing deferrals from any pay that continues after the employee's termination date should not be permitted.