W-2 error

Employer switched payroll companies mid-year 2018.  Due to some type of error participant defers $20,000 during 2018, but the relevant parties (participant, employer, payroll company) think that only $18,500 has been deferred.  The participant is catch-up eligible.  The issue is that W-2 was prepared and taxes filed assuming a contribution of $18,500.  

Is there any way to get around this, other than by amending the W-2 and tax return?  Employer prefers that it be distributed to the participant similar to an excess deferral, participant is okay with that, but I'm not aware of anything that allows that.

Thanks in advance for any guidance.    

They "think" that only $18,500 was deferred or they "thought" that only $18,500 was deferred and prepared the W-2 that way, and now realize the error?

Assuming the latter, my position would be that the W-2 should be amended to reflect reality.  I suppose you could make a case that it's not what the participant wanted and look into appropriate corrections but I think you'd have to start by proving that it was indeed an error but I sure wouldn't want to go there.

I suggest that you must first determine what was actually withheld from actual paychecks.  W-2, plan records and account balance must correctly reflect that number.  Keep in mind that issues like FICA and FUTA are also involved, and those amounts must be the correct values, not what the employer or participant want the value to be.

I would take it back a step further and say the first step is to look at the participant's deferral election in effect for 2018 and determine how much he/she elected to defer.  That may or may not be the same amount they "think" was deferred.  Failure to follow the deferral election is an operational failure.  When you know for sure what was elected, what was actually deferred and what was deposited for the participant, then we can help you determine what correction, if any, is needed.