elective contriubtion did not go through payroll

For some reason, the last salary deferral for a participant did not go through payroll.  In an effort to get the contribution invested by 12/31, he wrote a personal check, which was then deposited into his account.

How does one correct this???

Can you get the payroll company to amend the W-2 to reflect that as a 401(k) Contribution?

I don't know that that is 100% correct but it would "fix the issue"

Why was there a concern about getting the contribution invested by 12/31?  It is not unusual for the final payroll of the year to be invested after the close of the plan year, and payroll still reports the deferrals as made during the plan year.

Did payroll report the amount on the individual's W-2 as a deferral?  Were payroll taxes withheld from a paycheck and submitted to the appropriate taxing authorities?

The more of these items were not done, the more likely there is no argument for letting the money stay in the plan.  If all of the issues associated with the making a deferral are fixed as best as possible, then consider at least writing up a complete description of the circumstances including the payroll error and what was done to fix the issue, and keep the documentation with plan records.

Writing a personal check creates a clear trail that the individual had control of the funds - a key requirement for an elective deferral.  Hopefully the individual is not a plan fiduciary or an HCE.  That would taint the situation even more.

Client just inquiring at this point, I do not know, but was going to wuestion.

What if this was an HCE?

Plan administrators are expected to operate the plan in uniformly and consistently for all participants all the time.  Writing a check to the plan should not have happened and it is an operational error that should be addressed.  The PA will decide how to address it and will need to be able to defend the fix.  Without a prescribed explicit fix to point to in regulations, the PA should be comfortable that the they are not accommodating the participant because the participant is an HCE.  It has long been a concern of the IRS that plans should not unduly favor higher paid individuals.  In discussing alternative fixes to operational issues, I have asked the PAs if they would be confident explaining, while sitting at the table with an IRS or DOL agent, that their decision was reasonable and fair.