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ADP fails, refunds, then doesnt fail. What about 5330?


BG5150

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Hypothetical situation:  2019 plan fails the ADP test, and they correct it with refunds August 2020.

The 5330 tax is $1,050 and was paid.

Then this January, they realize that some HCE comp was lower than in reality.  With the new numbers, the plan passes.

What happens to that $1,050 excise tax?  The plan didn't really need to be corrected, so it couldn'tve been late.  Can you ask for a refund of your tax?

QKA, QPA, CPC, ERPA

Two wrongs don't make a right, but three rights make a left.

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I believe you would just need to file an amended 5330. There is a section in the instructions for "Claim for Refund or Credit/Amended Return."

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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