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Excess Anual Additions and Pick-up Contributions

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A 401(a) defined contribution plan has discretionary employer contributions and pick-up contributions. Pick-up contributions are considered employer contributions. The plan failed 415 limits testing. EPCRS instructs to place the excess annual additions into an unallocated account to be used as an employer contribution in the succeeding year(s). Employee deferrals and after-tax contributions can be returned to the participant. 

Are there any special rules where all or a portion of the excess annual addition consists of pick-up contributions?

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No, there are no special rules where the excess annual addition consists of pick-up contributions. They are basically just treated as employer contributions.

However, as a practical matter, I would reduce discretionary employer contributions before picked-up contributions.  To the extent that you have reduced employees' paychecks in order to make the picked up contributions, you're likely to have a lot of issues if you then use the money for other employees, or to reduce employer contributions in a later year.

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