Excess contributions to 408(k)

[cred65]

Client has made excess contributions for last three years. My question; what is the procedure to remove or reallocate the excess contribution for 2013. Does an extension give the client extra time to execute his plan?

TIA

[kcjenkins]

To deduct contributions for a year, the employer must make the contributions not later than the due date (including extensions) of the employer’s return for the year. See IRC 404(h)(1). If more than 15% is contributed for a year, the excess can be deducted in subsequent years to the extent less than 15% is contributed in such subsequent years.

Applicable penalties if the excess contributions are not withdrawn in a timely manner, see Treas. Reg. 54.4979-1(a)(4).