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previous page Previous Page: Publication 571 - Tax-Sheltered Annuity Plans (403(b) Plans) - How Do I Know If I Have Excess Contributions?
next page Next Page: Publication 571 - Tax-Sheltered Annuity Plans (403(b) Plans) - Distributions and Rollovers
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication
taxmap/pubs/p571-020.htm#en_us_publink1000129456

What Happens If I Have Excess Contributions?(p13)


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previous topic occurrence Contributions (IRAs & Pension Plans) next topic occurrence

Certain excess contributions in a 403(b) account can be corrected. The effect of an excess 403(b) contribution will depend on the type of excess contribution.
taxmap/pubs/p571-020.htm#en_us_publink1000129457

Types of excess contributions.(p13)


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If, after checking your actual contributions, you determine that you have an excess, the first thing is to identify the type of excess that you have. Excess contributions to a 403(b) account are categorized as either an:
taxmap/pubs/p571-020.htm#en_us_publink1000129458

Excess Annual Addition(p13)


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previous topic occurrence Excess Annual Addition next topic occurrence

An excess annual addition is a contribution that is more than your limit on annual additions. To determine your limit on annual additions, see chapter 3 (chapter 5 for ministers or church employees).
In the year that your contributions are more than your limit on annual additions, the excess amount will be included in your income.
Amounts in excess of the limit on annual additions that are due to elective deferrals may be distributed if the excess contributions were made for any one of several reasons, including:
taxmap/pubs/p571-020.htm#en_us_publink1000129459

Excise Tax(p13)


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previous topic occurrence Excise Tax next topic occurrence

If your 403(b) account invests in mutual funds, and you exceed your limit on annual additions, you may be subject to a 6% excise tax on the excess contribution. The excise tax does not apply to funds in an annuity account or to excess deferrals.
You must pay the excise tax each year in which there are excess contributions in your account. Excess contributions can be corrected by contributing less than the applicable limit in later years or by making permissible distributions. See chapter 8 for a discussion on permissible distributions.
You cannot deduct the excise tax.
taxmap/pubs/p571-020.htm#en_us_publink1000129460

Reporting requirement.(p13)


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You must file Form 5330 if there has been an excess contribution to a custodial account and that excess has not been corrected.
taxmap/pubs/p571-020.htm#en_us_publink1000129461

Excess Elective Deferral(p13)


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Excess Elective Deferral

An excess elective deferral is the amount that is more than your limit on elective deferrals. To determine your limit on elective deferrals, see chapter 4.
Your employer's 403(b) plan may contain language permitting it to distribute excess deferrals. If so, it may require that, in order to get a distribution of excess deferrals, you either notify the plan of the amount of excess deferrals or designate a distribution as an excess deferral. The plan may require that the notification or designation be in writing and may require that you certify or otherwise establish that the designated amount is an excess deferral. A plan is not required to permit distribution of excess deferrals.
taxmap/pubs/p571-020.htm#en_us_publink1000129462

Correction of excess deferrals during year.(p13)


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If you have excess deferrals for a year, a corrective distribution may be made only if both of the following conditions are satisfied.
taxmap/pubs/p571-020.htm#en_us_publink1000129463

Correction of excess deferrals after the year.(p13)


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If you have excess deferrals for a year, you may receive a corrective distribution of the excess deferral no later than April 15 of the following year. The plan can distribute the excess deferral (and any income allocable to the excess) no later than April 15 of the year following the year the excess deferral was made.
taxmap/pubs/p571-020.htm#en_us_publink1000129464

(p13)


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taxmap/pubs/p571-020.htm#en_us_publink1000129465

Tax treatment of excess deferrals not attributable to Roth contributions.(p13)


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If the excess deferral is distributed by April 15, it is included in your income in the year contributed and the earnings on the excess deferral will be taxed in the year distributed.
taxmap/pubs/p571-020.htm#en_us_publink1000129466

Tax treatment of excess deferrals attributable to Roth contributions.(p13)


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For these rules, see Regulations section 1.402(g)-1(e).
previous pagePrevious Page: Publication 571 - Tax-Sheltered Annuity Plans (403(b) Plans) - How Do I Know If I Have Excess Contributions?
next pageNext Page: Publication 571 - Tax-Sheltered Annuity Plans (403(b) Plans) - Distributions and Rollovers
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication