Employer deposited too much into the ESOP?

[jkharvey]

The Employer deposited $125,000 in excess of the 415 limits into the ESOP a couple of years ago. This amount was never deducted on the Corporate 1120 and was never "allocated" to participants. It is just sitting in the ESOP. This is excess contribution subject to 10% excise tax, correct? Also, can the ER remove this money?

[stephen]

I would think it is subject to the excise tax annually. Also, you may have a plan disqualificaiton issue since you are not following the terms of your plan document by allocating monies that have been contributed to the plan as stated in the document.

Under what premise do you think the employer can remove the money? I do not think they can as it is an unallocated contribution and should have been allocated according to the plan document.

[jkharvey]

That's my problem, I don't think there is a basis for removing the money. I was hoping that someone else might come up with one...lol

[Kirk Maldonado]

Assuming that the contribution was for the 2004 plan year and the plan year corresponds to the calendar year, why can't you treat the "excess" as a contribution for 2005?