participant mistakenly elected to defer too much

[Scuba 401]

participant incorrectly deferred too much. payroll was processed in accordance with the participant's instructions. can you refund the money once it is in the plan?

[ETA Consulting LLC]

No, I wouldn't recommend it Just change the election before the next payroll.

Good Luck!

[BG5150]

And/or have the participant take reduced deductions until it evens out.

[Scuba 401]

my view is they cant do it but was wondering if there is any authority anyone knows about. trouble is in this situation they deducted like 50% of their paycheck which of course creates a hardship for this participant.

[BG5150]

Might this be a "Mistake of Fact" candidate?

[Lou S.]

If the election for 50% was valid the participant is out of luck.

[Bill Presson]

Might this be a "Mistake of Fact" candidate?

What facts were mistaken?

[Lou S.]

Might this be a "Mistake of Fact" candidate?

What facts were mistaken?

Some forms have a box for % of pay and another for straight $ amount. He mught have thought he was filling out the box for $50 and put it into the 50%. Just throwing it out there not that I actially believe it. Like you Im not sure where mistake of fact might come in on this one.

[PensionPro]

All mistakes are not mistakes of fact. A mistake of fact is an unconscious ignorance of a fact that is material to the transaction. PA has to follow participant's written election not what may have been on participant's mind.

[Bill Presson]

Might this be a "Mistake of Fact" candidate?

What facts were mistaken?

Some forms have a box for % of pay and another for straight $ amount. He mught have thought he was filling out the box for $50 and put it into the 50%. Just throwing it out there not that I actially believe it. Like you Im not sure where mistake of fact might come in on this one.

While not a mistake of fact, that might be something I would recommend the employer look to help fix. A 50% deferral is a little outside the norm.

[BG5150]

If the ER is truly concerned with this participant, and if it won't break the bank, they could always bonus the amount back to the person to even it out. Then, maybe lower pay a little bit for a few months until the ER is paid back.

This way, the EE doesn't get behind on bills and the ER garners some good will from an EE.

[david rigby]

Slow down just a bit. Not all plans permit a 50% deferral.

If not permitted by this plan, there might be 2 mistakes: filling out the form incorrectly, and processing a deferral not permitted by plan provisions.

[12AX7]

How many payrolls were processed at the 50% rate?

[ForksnKnives]

If the election was valid and permitted by the plan it probably doesn't make sense to try to bend or break rules to give back some of the deferrals. It would probably be easier to (1) reduce the contribution rate going forward; and (2) process a payroll advance to the employee or a payroll-repaid short term loan to the employee.