Delinquent 5500 EZ - Excess Contribution

Taking on a new client (solo - EZ). They never filed 5500EZ for 2016-2019 so we are working to clean up. While working on these 5500's I discovered they deposited $500 to much in 2016 ($500 past 415 limit), and $35K excess for 2017. There were no contributions made in 2018 or 2019.  What would you recommend as the best way to fix the excess contribution? I am thinking that he needs to remove this money from the plan along with earnings. Thoughts?

Check rev proc 2019-19 for how to fix errors relating to excess amounts. You are past the end of the 2-year period for self-correction so this is likely VCP territory.

Follow up question. It looks like on his 2017 tax return he only deducted $54,000. If that is true, would this only be a deposit issue and therefore vcp not needed?

31 minutes ago, jmartinrps said:

Follow up question. It looks like on his 2017 tax return he only deducted $54,000. If that is true, would this only be a deposit issue and therefore vcp not needed?

That's good, he won't have to amend his tax returns. But it's still a qualification failure since it violates the 415 limit. Whether it can be self corrected or has to go to VCP depends if it counts as a "significant" failure. Probably it is significant but I am not privy to all the facts and circumstances. There may also be an excise tax on the non-deductible contribution.