Correction of Excess Contributions Sample Clauses
The Correction of Excess Contributions clause outlines the procedures for addressing situations where contributions to a retirement or benefit plan exceed legal or plan-imposed limits. Typically, this clause specifies how excess amounts will be identified, the timeframe for correction, and the methods for returning or reallocating the excess funds, such as refunding the overage to the contributor or adjusting future contributions. Its core function is to ensure compliance with applicable laws and regulations, thereby preventing tax penalties and maintaining the qualified status of the plan.
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Correction of Excess Contributions. 7.3.1 Elective Deferrals that are in excess of the limitations under Code section 402(g), or that cause excess Contributions under Code section 415(c), will be returned, with earnings allocable thereto, not later than the April 15th of the year following the year in which they were contributed, upon
(a) timely receipt of written instruction from the Plan Administrator or You; or (b) in the absence of such written instruction, upon determination by the Custodian that an excess exists, based solely on the Custodian’s records.
7.3.2 An excise tax of 6% generally will apply to excess Contributions under Code section 415(c), in the year of the excess Contribution and in every subsequent year until the excess is corrected either by distribution, where permitted, or in a subsequent year, by contributing less than the amount otherwise allowed. It shall be Your obligation to report and pay such excise tax.
7.3.3 In the event that the Contributions made on behalf of the Participant for any year must be reduced for purposes of complying with other requirements under the Code, including the requirements of Code section 401(m), or in the event Contributions are made to the Custodial Account other than in accordance with the terms of the Plan, including Contributions made by reason of a mistake in fact, the Custodian will correct such excess Contributions in accordance with the applicable requirements of the Code or Plan, or as directed by the Plan Administrator, provided that the Custodian has been timely and properly notified of such excess Contributions.
7.3.4 The Custodian will apply the contribution limits based solely on the information known to the Custodian and any additional information that has been provided to the Custodian in a timely manner and acceptable form. For this purpose, the Custodian will assume, unless informed otherwise, that the Contributions made on behalf of the Participant for any year do not exceed the amount of the Participant’s compensation for that year that is properly taken into account for purposes of applying the contribution limits.
Correction of Excess Contributions. In the case of a distribution of excess contributions, the Plan shall distribute pre-tax Deferrals and earnings thereon first.
Correction of Excess Contributions. If the Plan fails the ADP Test for a Plan Year, the Plan Administrator may use any combination of the correction methods under this Section to correct the Excess Contributions under the Plan. (See Section 17.7(d) for the definition of Excess Contributions.)
Correction of Excess Contributions. An excess may be created from your salary deferrals or from your employer's contributions (either matching or nonelective) and must be corrected.
Correction of Excess Contributions. 7.3.1 In the event that the Contributions made on behalf of the Participant for any year must be reduced for purposes of complying with requirements under the Code, or in the event Contributions are made to the Custodial Account other than in accordance with the terms of the Plan, including Contributions made by reason of a mistake in fact, the Custodian will correct such excess Contributions in accordance with the applicable requirements of the Code or Plan, or as directed by the Plan Administrator, provided that the Custodian has been timely and properly notified of such excess Contributions.
7.3.2 The Custodian will apply the contribution limits based solely on the information known to the Custodian and any additional information that has been provided to the Custodian in a timely manner and acceptable form. For this purpose, the Custodian will assume, unless informed otherwise, that the Contributions made on behalf of the Participant for any year do not exceed the amount of the Participant’s compensation for that year that is properly taken into account for purposes of applying the contribution limits.
Correction of Excess Contributions. The distribution of any excess contributions made with respect to the 2011 Plan Year shall first be made from elective deferrals other than a Converge Member's ▇▇▇▇ 401(k) Contributions then from his ▇▇▇▇ 401(k) Contributions.
Correction of Excess Contributions. 26 5.4 Limit on Deferrals.................................................................... 28 5.5 Limit on Annual Additions............................................................. 29 TABLE OF CONTENTS PAGE ---- ARTICLE VI ACCOUNT ADMINISTRATION................................................................ 32 6.1 Plan Accounts and Allocation of Contributions......................................... 32 6.2 Allocation of Investment Earnings and Losses.......................................... 33
Correction of Excess Contributions. Any amount you contribute for a tax year that exceeds the allowable contribution amount is an excess contribution and subject to a 6% penalty tax for each year it remains in your ▇▇▇▇ ▇▇▇. You may avoid the penalty tax if you remove the excess contribution along with the net income attributable to the excess before your tax return due date, plus extensions. For assistance in calculating the net income attributable to an excess contribution using an IRS-approved method, refer to Treasury Regulation 1.408-11, IRS Pub. 590-A and/or your tax advisor. The net income must be included in your taxable income. If you are under age 59½ and do not qualify for an exception, the net income is also subject to the IRS 10% premature distribution penalty. File IRS Form 5329 to pay any excise taxes you owe. To correct an excess contribution after your tax filing due date (plus extensions), you may withdraw the excess amount (no earnings need to be withdrawn). Alternatively, if you are eligible to contribute in a subsequent year, you may correct the excess amount by redesignating the amount to a subsequent year. Regardless of which method you use to correct the excess after your tax return due date, plus extensions, the 6% penalty is required for each year it remained in the ▇▇▇▇ ▇▇▇.
Correction of Excess Contributions. If the Average ADP or the Average ACP (or both) of the group of Highly Compensated Employees exceeds the limits of Section 5.2 for any Plan Year, the Committee shall take one or more of the actions described in this Section as it deems appropriate in order to meet the limits of Section 5.2 for such Plan Year.
(a) The Committee may reduce the Salary Deferral Contributions of the Highly Compensated Employees in a manner prescribed by Code Section 401(k)(8)(C), applicable regulations, and other IRS guidance. The determination of the amount of Salary Deferral Contributions which must be reduced shall be made after determining the deferrals in excess of the 402(g) Limit (as described in Section 5.4). The reduced Salary Deferral Contributions (and earnings thereon) shall be distributed in accordance with paragraphs (e) and (g). The Committee will determine the respective shares of excess contributions by starting with the Highly Compensated Employee(s) who has made the greatest contribution, reducing his contribution to the next highest contribution, then, if necessary, reducing the contribution of the Highly Compensated Employee(s) who has made the next greatest contribution (including the contribution of the Highly Compensated Employee(s) whose contribution the Committee already has reduced), and continuing in this manner until the average ADP for the Highly Compensated Group satisfies the ADP test.
(b) The Committee may reduce the Matching Contributions of the Highly Compensated Employees in a manner prescribed by Code Section 401(m)(6)(C), applicable regulations, and other IRS guidance. The determination of the amount of Matching Contributions which must be reduced shall be determined after determining the deferrals in excess of the 402(g) Limit (as described in Section 5.4) and the excess Salary Deferral Contributions under paragraph (a). The reduced Matching Contributions (and earnings thereon) shall be distributed in accordance with paragraph (e). The Committee will determine the respective shares of excess aggregate contributions by starting with the Highly Compensated Employee(s) who has received the greatest contribution, reducing his contribution to the next highest contribution, then, if necessary, reducing the contribution of the Highly Compensated Employee(s) who has received the next greatest contribution (including the contribution of the Highly Compensated Employee(s) whose contribution the Committee already has reduced), and continuing in this ...
Correction of Excess Contributions. Excess Contributions must be corrected by using one or a combination of the following methods:
(a) By making Qualified Non-Elective Contributions or Qualified Matching Contributions in favor of Participants who are Non-Highly Compensated Employees. Qualified Non-Elective Contributions shall be made to Participants that are Non-Highly Compensated Employees as provided in the Adoption Agreement.
(b) By designating all or a portion of the Profit Sharing Contributions and/or Matching Contributions as Qualified Non-Elective Contributions and/or Qualified Matching Contributions, respectively.
(c) By distributing to the respective Participant the amount of his Excess Contribution plus earnings (or losses) of such excess. The following rules will apply to such distributions:
(1) The Employer must designate the distribution as a distribution of an Excess Contribution (together with income or loss attributed to such excess). The amount so designated must be distributed by the end of the succeeding Plan Year.
(2) Income or loss attributable to the period between the end of the Plan Year and the date of distribution will be disregarded in determining income or loss that will be distributed as an Excess Contribution.
(3) The amount to be distributed as an Excess Contribution will be reduced by any amounts relating to such Plan Year previously withdrawn by the Participant.
(4) The amount of Excess Contribution to be distributed may be made notwithstanding any otherwise applicable restrictions or spousal consent requirements on in service withdrawals or distributions.
(5) Any distribution of Excess Contribution for any Plan Year shall be made to the Highly Compensated Employees on the basis of their respective portion of Excess Contributions attributable to each of such Employees.
(6) The distribution of Excess Contribution shall be reported on Form 480.7C (Informative Return — Retirement Plans and Annuities) for the calendar year of the distribution, or any other equivalent form.
(d) By recharacterizing the Excess Contribution of a Participant as an After-Tax Contribution. The following rules will apply to such recharacterization:
(1) A recharacterization will be permitted only if the Adoption Agreement permits After-Tax Contributions.
(2) The amount recharacterized will be nonforfeitable and subject to the same distribution requirements as After-Tax Contributions.
(3) The amount recharacterized cannot exceed, in combination with other After-Tax Contributions, the amoun...