Difference between 401(a)30 and 402(g)-EPCRS application

EPCRS gives a correction for "[f]ailure to distribute elective deferrals in excess of the §402(g) limit (in contravention of §401(a)(30))."

401(a)30 just points to 402(g).

Can there be excess 402(g) deferrals NOT in contravention of 401(a)30?

And also, the plan MUST remove the 402(g) excess (in contravention of 401()(30)), or the plan risks disqualification.

I seem to remember if the excess deferrals were there after April 15, you didn't do anything until the participant took their money (year?) later.

And I read that if the excess deferrals are NOT in contravention of 401(a)(30), then the deferrals HAVE to stay there until there is a distributable even.  Again, under what circumstances would that be? 

On 5/2/2022 at 10:35 AM, BG5150 said:

Can there be excess 402(g) deferrals NOT in contravention of 401(a)30?

402(g) is an individual limit. 401(a)(30) is a plan limit. You can have a 402(g) excess that is not a 401(a)(30) excess when an individual contributes to two or more plans of unrelated employers during the same year.

On 5/2/2022 at 10:35 AM, BG5150 said:

And I read that if the excess deferrals are NOT in contravention of 401(a)(30), then the deferrals HAVE to stay there until there is a distributable even. 

Most plans will provide the ability for a participant to request a refund of their excess contributions in this scenario. The request usually has to be made by a reasonable deadline in advance of April 15.

But the plan risks disqualification if they don't remove the excess timely after 4/15, so the administrator MUST refund the excess.  But, if the excess is due to contributions to two plans, it CAN stay there until they take their money, right?

If it's a 401(a)(30) violation, e.g. they allowed the participant to exceed the limit in that plan (or in multiple plans within the same controlled group), then they have to distribute, as the plan never should have accepted the contribution in the first place. In other words, the plan document probably says that a participant will not be allowed to contribute more than the annual limit, so by allowing the participant to contribute in excess of the limit, there is an operational failure and that can be corrected by distributing the excess under EPCRS.

If it's only a 402(g) failure, and not a 401(a)(30) failure in any plan, then there is no qualification issue and no need to distribute any of the contribution. In fact, there is no ability to distribute the excess unless the participant has a distributable event, such as age 59½ or termination of employment. There is a tax consequence for the participant but that is not the plan's problem.

Let me make a fine distinction to what C.B. Zeller says.  Code section 402(g) and the regulations thereunder provide a mechanism whereby a participant may request a refund of an excess deferral, and the plan can do so up to 4/15 of the year following the year of the excess.  Different plans have different deadlines for this request, usually 3/1 or 3/15, so that they have time to process.

But, once the 4/15 deadline for those refunds passes, the distributable event window is closed and a distribution of the excess amount CANNOT be made until another distributable event occurs.

But EPCRS seems to say that after 4/15, the deferrals must be refunded (if they contravene 401(a)(30)).

So in summary, after 4/15:

Excess in one plan, must distribute per EPCRS.

Excess in one or more plans, cannot take until distributable event.

Is that correct?