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We have a question about 401k deductions. Hopefully someone can point us in the right direction. Here is the scenario:
An employee (age 50+) has a 401k deduction set up as a flat dollar amount ($800) per pay period. The payroll system employs a "catch up" code to automatically activate in the payroll following the payroll in which the max was reached. However, in the payroll that brought the employee’s 401k to the max, the amount needed was only $250. Is it correct if the deduction that brought him to the max was less than the deferral he set up? Isn't the employer obligated to take the full deferral in each payroll? Should we manually switch this to the catch up code? Sounds like a nightmare if we have to watch every employee's 401k max. Thanks for any help.