Excess Contributions to SARSEP due to Compensation Error

[Guest nihalsa]

Due to error in compensation estimates, I have contributed excess money into my SARSEP account for year 2000. After 31 December 2000, I have changed my job and my new employer does not offer SARSEP but has a 401(k) managed by different institution.

How do I correct the excess contribution to my SARESEP. Any help we be appreciated. Thanks

[Gary Lesser]

More information is needed. Please specify compensation and exactly what limit was exceeded (e.g., 125% rule, 15% limit, and so on).

[Guest nihalsa]

The total contribution by me and my employer have exceeded the 15% limit. Thanks for your input.

[Gary Lesser]

The excess amount is reported on Form W-2 in Box 1 (or treated as EI if self-employed). The amount is subject to FICA and FUTA (unless already considered for that purpose). The full amount of the elective contributions (including the excess is reported in Box 13, unless self-emplyed). The excess amount, plus any gain thereon, should be removed by the due date of the Federal income tax return. The gain is taxable in the year of the deferral and may be subject to a 10% penalty if under age 59-1/2, unless an exception appies.