Excess Deferral Discovered after April 15th

[Guest platte1]

I have a situation where an HCE just discovered he has an excess deferral for 2003. He received two W-2's from different employers---but they were related employers. Since we are past 4-15 and evidently can not distribute, would anyone have suggestions on how to handle? Excess is about $300.00. Thank you.

[WDIK]

http://benefitslink.com/boards/index.php?s...opic=23094&st=0

[Guest platte1]

Just a follow up note the employers that this HCE worked for were related---which I think is where the problem comes in. Thank you.

[WDIK]

The deferral limit under 402(g) is an individual limit, so I think the ramifications of the excess deferrals are the same whether the two employers are related or unrelated.

[E as in ERISA]

I disagree. Its my understanding that if they are not related, then its not a plan qualification issue so there is no way to correct after 4/15. But if they are related, then it is a plan qualification issue under 401(a)(30) so you can correct under EPCRS even if its after 4/15. Self correction may be an option for a limited time period.

[WDIK]

Thanks for setting me straight. I kept picturing two plans, each adopted by one of the related employers. Can I blame this on a long week to save face?

[Tom Poje]

Appendix A .04 (Rev Proc 2003-44 [EPCRS] )allows you to self correct, so to say you cant distribute is not quite correct.

given the conditions of being related employers, I would assume that means you have to distribute to avoid disqualification

[E as in ERISA]

If there's no 401(a)(30) violation, then you don't have a plan qualification issue. Appendix A .04 can be used where the 402(g) excess is "in contravention of 401(a)(30)." That only occurs where you have related employers.

[Guest platte1]

After reading 2003-44---A.04, it appears as though this added (again, dealing with related employers) the provision that a post 4-15 excess means the dollars are now remvoved from the plan (which previous to 2003-44, I believe the dollars would have stayed in the plan in this scenario---in addition to a SVP situation)---and still would be taxable in 2003 (year of the excess) and when distributed. Again, thank you for all of your comments.