I agree that the amount in box 1 of the W-2 cannot be less than the the sum of the amounts in boxes 2, 4 and 6. Tax withholding cannot come from an amount that was contributed to the 401(k) because that money is in the 401(k). Also, $400 of income tax withholding seems like a suspiciously round number that seems unlikely to have been properly calculated based on wages and the Form W-4 in effect for calculating income tax withholding.
I've tried to think through the possible ways to correct this, but there seems to be no easy solution. The first thing I thought of would be to treat the the sum of the income tax withholding, Social Security tax withholding and Medicare tax withholding as an excess contribution to the 401(k). This excess would have returned from the 401(k) and paid back to the S corp, probably the easiest solution. If instead the wages are increased, Social Security and Medicare taxes would need to be recalculated and the additional amounts paid, so the increase in wages would have to cover not only the $400 of income tax withholding but also the increases in Social Security and Medicare taxes. Regardless of what is done, the W-2 would have to be corrected.
