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My last paycheck from 2023 was dated Friday, 12/29. Every date in the payperiod is within 2023.

I noted my payroll explanation shows the deduction occurring for me in tax year 2023. Today, the 401k provider shows the amount as a 2024 contribution, dated 1/2.

My overall contributions were right at the 22,500 limit for my age group (in fact, capped by the 2023 contributions YTD), but the allocation was applied here to 2024; so I lose some allocation to 2023 and appear to have already used about "one payroll" amount of 2024's limit.

Is it a correct situation that the deduction occurs to me in tax year 2023 and the contribution occurs against the limit in 2024 in line with the date they receive the funds?

Do I have a case to the provider for them to account for this amount as a deduction against 2023 limits?

In the grand scheme losing one payroll from my limit isn't a huge deal, but it's obnoxious given I planned to the limit (with no apparent way to have perfectly arranged it given the payroll system applied 2023 YTD calculation), and it'll happen in maybe 4 out of 14 years where the biweekly payroll is just so close to New Years Day where I catch this spread between pay date and the receipt by the provider.

My search found this written by Investopedia: "But the tax deductions for 401(k) plan contributions and most other salary-deferral retirement plans usually apply only to the calendar year in which they are actually withheld from the taxpayer's paycheck." with a citation to this IRS page that is precise in stating that deferrals are not subject to withholding at time of deferral, and says nothing about which year the deferral is counted. Is there an IRS or other government source that clarifies if this is correct?

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It doesn't matter what your 401(k) provider thinks, what matters is when the money was deferred

This isn't something specific to 401(k)s; all income/payroll taxes, and associated paycheck deductions and limits, are tied to when the money is paid/withheld. If your employer paid you on 12/29, it doesn't matter that it took your 401(k) until the next week to register it, the wages were paid, and contributions withheld/deferred, in the 2023 tax year.

It's not the 401(k)'s responsibility to prevent excessive contributions either, it's your employer's (and yours, if you have multiple jobs offering elective contribution retirement plans of this sort), so it shouldn't matter when your 401(k) thinks the contributions were made.

The only exceptions to these rules are specific plans with rules explicitly allowing backdated contributions. IRAs can take contributions for the prior year up until April 15th (you're responsible for marking which tax year the contribution is for). HSA passthrough contributions for December might not be made until January, but credited for the prior tax year, and similar to IRAs, your personal contributions can be made for the prior tax year for awhile.

401(k)s have no such rules, and the limit is on calendar year deferrals, not contributions, and from your own link (emphasis added):

The law, under IRC section 402(g), limits the amount that a participant can defer on a pre-tax basis each year.

The language of IRC section 402(g) doesn't disagree with that summary. You deferred the money in 2023, so it counts against the 2023 limit. That your 401(k) was late to register it is irrelevant.

That said, your employer, your plan, or both, screwed up, so you should contact them to make sure the information is corrected

Legally, you're in the clear, but if there is an unusual or faulty setup between your corporation and the 401(k) administrator (and from what I've heard from benefits attorneys I know, screwed up 401(k) setups are quite common), you'll want to confirm that, whatever the 401(k) thinks, it won't reject contributions it believes exceed the annual limit. You also want to make sure that your employer has accurately recorded the date of deferral, as a mistake in the recording could screw up your W-2 (for last year and/or this year), and getting that fixed now is a lot easier than trying to get it fixed later.

So to be clear:

  1. Contact your employer's payroll department immediately to ensure your W-2 accurately reflects the deferral as occurring in the 2023 calendar year (if not, they need to correct it, as, assuming you were actually paid on the 29th, they've made a mistake). The date of contribution on the 401(k) side may be mistaken due to employer error, and that's a bigger problem (paperwork-wise; you haven't broken any laws).
  2. Whether or not your employer made a mistake, it's a good idea to contact your 401(k) administrator to have the date of the contribution fixed; they shouldn't reject contributions over the limit, but better safe than sorry.

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