Voluntary Contributions Cause 415 excess

[thepensionmaven]

We have a SHNE 401(k) with voluntary contributions, all testing done.

Affected participants of course owners, removed the excess and claimed the earnings as taxable.

In calculating the excess, SHNE for these HCEs was not contributed.  Plan doc allows SHNE for owners, but I believe the thinking was, since the SH contribution has not been made yet, why treat as excess.

Is it permissible for the owners to "waive" the SHNE for 2018, or do they have to contribute, then remove it from the plan?

[Lou S.]

You have to follow the terms of the plan. If they were eligible for the SHNE they need to receive it. If this creates a 415 problem, you need to correct.