401(k) deferrals deposited into IRA

For 2022-2025, an employer has contributed an employee's 401(k) deferrals into her personal IRA.  I'm curious if anyone has seen this situation and how it was corrected and/or suggestions on how to correct.

Just to be clear, the employer contributed an employee's 401(k) deferrals into the employer/ owner's personal IRA or the employee's IRA? If it's the former, wow...

I saw this on a takeover a number of years ago. There were only two participants in the plan - the owner and one employee - and the owner had been making contributions into the employee's personal IRA. It was a 401(a) violation due to failure to keep the assets in trust. We filed under VCP and had them move the assets into a plan account.

No, sorry Reluctant_Lawyer, they put them in the employee's IRA instead of a plan account.

You may want to suggest to the employer to look into how the contributions were handled on the company's tax return and how the IRA provider reported the contributions to the employee.  If the employer took a deduction for the contribution and the IRA provider reported the contribution to the employee as a deductible contribution, then the contribution could have been deducted on the employer's tax return and on the employee's tax return.

If this did happen, emphasize that this is just a question and for the sake of maintaining sanity, keep repeating to yourself either "not my farm, not my pig" or "not by circus, not my clowns".

Thanks, Paul!