nancy Posted January 25, 2002 Report Share Posted January 25, 2002 A SAR-SEP fails the 1.25% test for 2001 and must return money to the HCE. Does this return count against his 15% limit for 2001? Or can the employer make a contribution sufficient that the HCE would receive 15% (ER plus salary deferral)? Link to comment Share on other sites More sharing options...
Gary Lesser Posted February 4, 2002 Report Share Posted February 4, 2002 Anything contributed counts against the 15% limit. It creates an excess in the IRA that can ONLY be removed by the IRA owner. The e/er can not cause a distribution. If it only is an ADP violation (an not a 15% limit violation), special notice requirments must be satisfied. Either way the excess is reported in box 1 of Form W-2 (the full amount of the elective is reported in box 13). The employer can contribute the difference (up to the 15% of net amount), but the allocation must be uniform in percentage (or integrated with social security). Can't just willy nilly up everyone to 15%. Link to comment Share on other sites More sharing options...
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