HCE violated 402(g)... effect on profit sharing?

[AlbanyConsultant]

Working on an s-corp where the two owners deferred $25K in 2016.  They are both over age 50, so they'll get $1K (+ earnings) refunded by 4/15/17.  Fine.

 

This plan also has an integrated profit sharing that they like to max out.  I know that these excess deferrals would count in the ADP Test (if the plan wasn't a safe harbor 3%), but could they affect the profit sharing?  Do they count towards their individual 415 limits?

 

Thanks.

[RatherBeGolfing]

1 hour ago, AlbanyConsultant said:

Working on an s-corp where the two owners deferred $25K in 2016.  They are both over age 50, so they'll get $1K (+ earnings) refunded by 4/15/17.  Fine.

 

This plan also has an integrated profit sharing that they like to max out.  I know that these excess deferrals would count in the ADP Test (if the plan wasn't a safe harbor 3%), but could they affect the profit sharing?  Do they count towards their individual 415 limits?

 

Thanks.

If corrected by 4/15/2017, the excess is NOT an annual addition.

 § 1.415(c)-1(b)(2)(ii)(D)

Excess deferrals that are distributed in accordance with § 1.402(g)-1(e)(2) or (3) do not give rise to annual additions.

[AlbanyConsultant]

Thank you!