Excess Deferrals

[thepensionmaven]

Recently took over a large 401(k) plan too late in 2016 to not have the 10% excise tax apply.

Several of the HCEs will have to take distributions of their excess in 2016.

Over 100 participants, must do the Independent Auditors Report.

Accountant wants us to set up a liability as of 12/31/2015 for the excess and show as such on Form 5500.

Also, since we did not have any of the information necessary to do the ADP test as of July 31, we filed for an extension only for Form 5500.

Is form 5330 due for 2015, or for 2016 when the funds are distributed?

Any suggestions?

[Lou S.]

I believe this falls under 4979 and the due date is "the last day of the 15th month after the close of the plan year in which the excess contributions or excess aggregate contributions relate" which for calendar year 2015 plans would be March 31, 2017.

See Page 2 of IRS instriuctions

https://www.irs.gov/pub/irs-pdf/i5330.pdf

[Tom Poje]

just to make sure on the terminology being used, because the thread title isn't quite correct, though it is obvious from the question being asked what is meant.

as sort of pointed out by Lou

Excess Contributions refers to failed ADP test so would refer to deferrals.

Excess Aggregate Contributions refers to failed ACP test, usually would be match, could be after tax if the plan permitted them.

Excess Deferral refers to deferrals over the deferral limit - currently 18,000 (ignoring possible catch up) Since these involve an individual limit and are a tax issue, and to avoid an individual penalty generally are to be corrected by April 15 (or more if it is the weekend), though if not corrected could lead to plan disqualification as well.