Latest date for distribution of excess annual additions?

[Richard Anderson]

Assuming a "reasonable error", when must elective deferrals be distributed to correct excess annual additions? Is there a deadline similar to excess deferrals (April 15) or excess contributions (March 15)? If there is a deadline, what are the consequences of a late distribution of the excess? We have just now received census data for a 12/31/99 year end plan, and one participant deferred 31%.

[Richard Anderson]

Can anyone help here?

[bzorc]

My understanding is that it has to be out by the end of the plan year following the year of excess addition; therefore for a calendar year 1999 plan the Section 415 excess has to be out by 12/31/00.

[MWeddell]

Neither the Code nor the regulations state a deadline. I'd conclude that there is no deadline. IRS officials informally summarize the situation a little differently, but basically concede the point: "There is no regulatory deadline for making the 415 correction. The expectation is that the correction should be made within a reasonable time after it is discovered. For example, the Service would not look favorably on a full year's delay in getting the correction made." 1996 Enrolled Actuaries Meeting "gray book," question 20.