TPA Bob Posted December 31, 2014 Posted December 31, 2014 Have a new client who has over contributed to their profit sharing plan in 2013. They are now out of business and will not have any compensation (starting in 2014). What can I do about the excess contribution? They cannot use 2013 compensation as after the 12 month period. All guidance refers to using the excess amount in the following years but they will not have any compensation.
BG5150 Posted January 2, 2015 Posted January 2, 2015 If it wasn't supposed to be in there in the first place, could you use it for an expense? QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
Jim Chad Posted January 2, 2015 Posted January 2, 2015 It is now a plan asset.....so I don't see why not.
TPA Bob Posted January 2, 2015 Author Posted January 2, 2015 My problem is that the total overpayment is about $70,000. Would love to charge them that much....... I do not know what I can do other that EPCRS. ETA Consulting LLC 1
Jim Chad Posted January 5, 2015 Posted January 5, 2015 Can you just take it out as a mistake of fact? How did it get in there? Or maybe allocate it as discretionary nonelective for 2013 and file under epcrs.
TPA Bob Posted January 5, 2015 Author Posted January 5, 2015 No doubt it was a mistake - but looks like to me that non deductibility is not considered a mistake in fact on its own.
Lou S. Posted January 5, 2015 Posted January 5, 2015 Can you redo the 2013 allocation or are all participants in 2013 at the 415 limit? I'm assuming the deposit was made timely for 2013 415 limit which may or may not be a good assumption on my part.
Jim Chad Posted January 6, 2015 Posted January 6, 2015 I would think that for $70,000 it would be worth getiting a legal opinion on paying it back to the employer as a mistake of fact
Belgarath Posted January 6, 2015 Posted January 6, 2015 Just curious - what is it that EPCRS can do for you? I don't think there is any fix under EPCRS, although my memory may well be off. I believe that EPCRS will require that it be placed in an unallocated account to be used later as appropriate or required, which ultimately leaves you still stuck with an unallocable amount subject to reversion tax. I agree that simple nondeductibility is not, on its own, a mistake of fact. If you can't find a way to legitimately consider it a mistake of fact as Jim suggested (potentially difficult) then I think you are stuck. I'd love to hear any other solutions.
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