Participant requests 401k suspension - does not happen

[jmartin]

A participant completed a form mid October requesting to suspend his 401k contributions. The employer received the form and "entered it into their system" so he is shown as 0% in their records. Yet on payroll he is still deferring. They have successfully shut him off for the first pay in January. Even though there is one more December payroll, it is too late to turn off the 401k so he'll have one more payroll deduction.

Is the stopping in January enough or should a refund be issued for the payrolls back to when he signed the suspension form? Since we do not know the final December payroll amount, I presume the refund would be processed in January (and count for 2013 income). All of the excess payroll withholding will still be counted in 2012 testing. Correct?

[Bill Presson]

If he really wants to push the issue, I would have the employer run a special payroll in December 2013 and make the necessary corrections.

The deferrals that are in the plan, I would forfeit and use them for future employer contributions. I wouldn't take the money back out of the plan.

But it's hard to believe he's really that upset if he let several payrolls go by.

[GMK]

Employer also needs to get payroll plugged into "their records," or it'll happen again, which would be a foolish outcome.