"I thought that the t/p was being taxed on funds that they did not contribute."

Yes, since employer contributions through work are considered the same as if the employee put them in, and your taxpayer has one disallowed month, you will need to do the math for how much is allowed in 2022 (I think that comes to $4,262 for your taxpayer? You need to document the math, though). And they are taxed on excess, the same as into an IRA is taxed until a corrective distribution is done. Your person might be fine, but it's time to stop contributing. They still have an account and can spend from it and invest it. Just no further contributions to it by anyone.