How do excess deferrals usually occur?
Rev. 4-17-03, E-mail Alert 2003-7

Since a plan may not accept excess deferrals, there is usually a program that monitors the 402(g) limit for each individual’s deferrals to the plan. Most excess deferrals occur when a taxpayer makes deferrals into unrelated employers’ plans during the same calendar year. Sometimes excess deferrals occur when an employer has more than one deferral plan and yet does not total the deferrals to both plans together. Usually excess deferrals occur when an employee changes jobs or if an employee has more than one job because the deferrals to each employer’s plan will not exceed the 402(g) limit. Thus, none of the employers would know about the problem unless the participant notified them and asked for a return of the excess.