What happens to excess 3% Safe Harbor cont. if made during the year?

[Guest jusducki]

Client contributes the 3% throughout the year and of course always makes errors. The largest error for '04 entails an overfunding of about $1200 for the SH for owner. Does he forfeit this amount plus earnings, thereby reallocating as PS contribution? Thank you.

[Guest jusducki]

Either I didn't pose this question properly or no one knows the answer (which, judging by all the posts here, I highly doubt this is the case)..so I'll try again....would the solution to an excess SH contribution be to reallocate it as a forfeiture to all eligible participants? Thanks!

[Guest Pensions in Paradise]

Anything above the 3% safe harbor nonelective would be treated as a profit sharing contribution and allocated in accordance with the plan's terms. Since $1,200 was deposited to the owner's account in error, then you also need to deduct from his account any earnings attributable to that $1,200. The $1,200 plus earnings would then be allocated to all eligible participants as a profit sharing contribution.

[Guest jusducki]

Thanks for making time to reply!

[Jim Chad]

Was anyone shortchanged? Could this money be used to make them whole?

Also: was this money sent to the investment company in Decermber or January? If in January, is it possible to account for it as a 2005 contribution?

Do you charge extra for doing administration on Plans that do this? I'm thinking we should.