late returning of excess contribution

[Guest stillwater]

One of my plans (calendar year plan) failed 2003 ADP test. No excess contribution was returned to the HCE until 2006. How shall I handle it? I believe the deadline for returning excess contribution is 12/31/2004, correct? Thanks.

[austin3515]

Make a contribution to the NHCE's equal to the refund ("one-to-one QNEC"). Should be a QNEC. See EPCRS as outlined in Rev Proc. 2003-44, unless there is a newer one (but I don' t think there is?).

[Guest stillwater]

Do I need to file 5330?

Make a contribution to the NHCE's equal to the refund ("one-to-one QNEC"). Should be a QNEC. See EPCRS as outlined in Rev Proc. 2003-44, unless there is a newer one (but I don' t think there is?).

[fiona1]

The 10% excise tax would still apply in the One-to-One method. So yes, a 5330 would need to be filed.

There are other options in the Self Correction Program that does not involve the excess contribution refunds being made - and therefore there would be no excise tax and the high comp employees would get to keep the money in the plan.

And 2003-44 is the most updated...