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Here it is.

@Belgarath "Employer-sponsored health coverage" refers to any group health plan in this context. So that includes dental and vision elections. The IRS has informally confirmed this. Note that the relaxed election change rules don't actually come from the CARES Act. They come from IRS Notice 2020-29: https://www.irs.gov/pub/irs-drop/n-20-29.pdf Also note that any mid-year enrollment or plan option change outside of a standard §125 permitted election change event would have to be approved by the carrier (or stop-loss provider if self-insured). Easier said than done.

Hey, fellow old-time pioneers! You'll enjoy this file. one-you-will-remember.mp3

It should be allocated as long as it's not violating any other limits. Doesn't matter whether it was deducted or not. They could choose to not deduct anything.

ESOP Guy & Bill, thank you both for your comments

Agree with ESOP Guy. There's no penalty for choosing to not deduct an eligible expense.

Sorry, I guess I assumed they only deducted 108k because they hit the limit not because of some other error. The way the first question is written it didn't make sense if the 108k wasn't the limit but now I see what the writer was saying. If the deductible limit was above the contribution made there is no excise tax. And while not a huge expert on the deduction side of things no I don't think they can take the $2k in 2020. You are allowed the deduction in the year made or up to the filing deadline of the corporate (or other tax return) for that year. So you can deduct a contribution made in the next year if it qualifies. I know of no provision that allows you to deduct a contribution made in the past. If the CPA refuses to amend the prior year's tax return I think the deduction is lost. I am happy to be told otherwise.

Disagree.5330 based on deductible not deducted.

There are fairly extensive rules under 1.401(a)(4)-11(d)(3) regarding "imputed service" (i.e., service credit while not actually performing services for an employer maintaining the plan) that lay out when crediting imputed service is nondiscriminatory and in what situations it's permissible. As long as you meet those requirements, it should be fine.