excess deferrals and excess contributions ..form 5500 and statements

[Draper55]

if deferrals are returned, whether it be for 402(g) excess or to correct an

ADP failure, is the effect on the 5500 simply a matter of whether

cash or accrual accounting is used otherwise ..does the return impact the year

of contribution or the year of return.. also how do most peope handle participant statements

with returns...reflect the return in the year of return??

[Lou S.]

We always reflect in the year they are actually paid.

Though I have seen some 5500s where they treat it as a payable and show it in the year that caused the refund. I think either is acceptable as long as you are consistant.

[Tom Poje]

well, the instructions for the 5500 says (sched H):

Line 2f. top Include on this line all distributions paid during the plan year of excess deferrals under Code section 402(g)(2)(A)(ii), excess contributions under Code section 401(k)(8), and excess aggregate contributions under Code section 401(m)(6). Include allocable income distributed. Also include on this line any elective deferrals and employee contributions distributed or returned to employees during the plan year, as well as any attributable income that was also distributed.

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if you have shown them as a payable, then you can't really shows them as a distribution the year they occur. The auditors once wanted me to show it as payable and I argued I needed to wait and show it as a distribution the year it was actually made. Not often I 'win', but they accepted the argument.