Excess contributions to Target Benefit Plan

[dmb]

Not realizing that forfeitures reduce the employer contribution, a client with a Target Benefit Plan contributed $3,000 excess contributions to the plan during the 2000 plan year. Should the excess be allocated or should it just be treated as a prepaid for 2001?? Also, since it was made during the year it must be included on the corporate return, is there a 10% excise tax on the excess contribution??

[AndyH]

It should be treated as a prepaid for the next year and the 10% penalty tax applies.