excess allocation

[bevfair]

401k plan imposes a 6% deferral limit on all HCEs. New HCEs for 2012 were not limited to 6% until Feb/March of 2012. Deferrals for the first month were more than 6%. As a result, their rates at 12/31/12 are 6.08% and 6.22%. In researching in the ERISA Outline and then in EPCRS, I think I have an excess allocation issue and need to 1) distribute the salary deferrals, plus earnings and 2) forfeiture any subsequent match, plus earnings. What I do not find in EPCRS is how I code this when I do the distribution? When is it taxable? 2012 or the year distributed? I found only one other post on this subject and it was from 1999, which indicated coding/treating as a 402(g) limit. I don't feel comfortable with that since it was so long ago. Anyone have any insight aside from calling the IRS directly? Thanks.

[Tom Poje]

of course, if you are real lucky these people are over age 50 and you can simply treat the amounts as a catch-up.

402(g) defines 'excess defrrals' as amounts exceeding the 'dollar limit', no mention is made of 'plan imposed limit'

so I don't think treating/coding them as a violation of yhe 402(g) limit makes much sense.

therefore i think I would code them in the year distributed as excess contributions.

way way way back when, the following write up(or Q and A 107 or 108)

http://benefitslink.com/modperl/qa.cgi?db=qa_plan_defects&n=109#.URu6RqU4tqX

referred to a 'how to correct' statement from the IRS by 'analogy to the 402(g) rules'

I would interpret that as saying "We have no guidelines, but you have to do something. Follow the general procedure outline for excess deferrals"

but I don't see their statement as saying you treat them as excess deferrals, rather they are simply using that as a reference point.

[bevfair]

Thanks Tom. I also fouond additional information on how to treat the distribution in the ERISA outline, Chapter 15 Section VI Part b¶6.d. (because I enjoy digging - is TPA work similar to anthropology?? )

[rcline46]

Forensic anthropology

[Tom Poje]

in my case, since people knock the 'L' out of me, it's anthro-po-je

[Guest lizannc]

Thanks Tom. I also fouond additional information on how to treat the distribution in the ERISA outline, Chapter 15 Section VI Part b¶6.d. (because I enjoy digging - is TPA work similar to anthropology?? )

You answer is helping me to correct excess allocations in a SARSEP but I cannot find the deadline date that these should be removed by. Excess Amounts other than Excess Allocations appear to have either a 4/15 or 12/31 deadline for a calendar plan year end.........

[Guest lizannc]

Thanks Tom. I also fouond additional information on how to treat the distribution in the ERISA outline, Chapter 15 Section VI Part b¶6.d. (because I enjoy digging - is TPA work similar to anthropology?? )

You answer is helping me to correct excess allocations in a SARSEP but I cannot find the deadline date that these should be removed by. Excess Amounts other than Excess Allocations appear to have either a 4/15 or 12/31 deadline for a calendar plan year end.........I guess I could go with a conservative approach and use 3/15 (tomorrow)! These excess allocations are deferrals over the plan's limit.