Nondeductible Contributions

[Randy Watson]

During an IRS audit the agent discovered that the employer deducted an amount greater than the 404 limit. The accountant clearly dropped the ball on this one. In addition to the tax deficiency, the IRS is imposing excise tax under 4972. The employer is going to pay the tax deficiency, but it does not want to pay the excise tax since it reasonably relied on its tax professional. Is there any such exception to the 4972 excise tax? Is the IRS open to waiving excise tax in unique situations, or should the employer just pay it and attempt to collect from the accountant?

[david rigby]

There may be some other issues here.

I suggest you use the Search feature with keyword "4972", then focus on the hits that fall in the "401(k) Plans" topic.