Can Employer Withsraw Amount Contributed to a DB Plan if Amount Contri

[Guest Edward McElroy]

An employer made a $100,000 contribution to a DB plan. Subsequently, the employer determined that the DB plan's normal cost was only $20,000. Can the employer withdraw excess as a mistake in fact if withdrawal occurs within one year of date of contribution. I don't think such a withdrawal is possible. Any thoughts. Thanks. Ed

[mwyatt]

IF you are subject to the quarterly contribution requirements, there might be some way of pulling the money out (I assume this was an end of year valuation where the employer contributed during the year). Look back at the material (circa 1988-1989) where this was addressed. If you are not subject to the quarterly contribution requirements I agree with you, money stays in (and the employer pays $8,000 in excise taxes on nondeductible contributions).

[M R Bernardin]

What about the ability to refund due to a disallowance of the contribution? I think the rule is if you get a ruling from the IRS before the tax return deadline that the contribution is nondeductible and if the plan expressly provides that contributions are conditioned on their deductibility, and if the plan allows refunds of contributions the deductions for which are disallowed, you can refund. Is it too late for this approach?