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March 26, 2021

Excess deferral

Your Guide

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Definition

Salary deferral contributions, contributions are limited to the lesser of the IRC § 402(g) limit or 100% of compensation. Salary deferral contributions in excess of this limit are excess deferral contributions.

The 402(g) limits are as follows:

YearIRC § 402(g) LimitCatch-up contribution limit
2014$17,500$5,500
2015$18,000$6,000
2016$18,000$6,000
2017$18,000$6,000
2018$18,500$6,000
2019$19,000$6,000

2020

$19,500

$6,500

2021

$19,500

$6,500

Potential COLA increase in increments of $500 for tax years beginning 2006 for salary deferrals and catch-up contributions.

Referring Cite

IRC § 402(g)(3)

Additional Helpful Information

    • Excess deferral contributions  should be corrected by April 15 following the close of the taxable year. The  distribution should include any income allocable to the excess
    • Failure to remove the excess deferral by the deadline could result in double-taxation to the employee

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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