solok excess employer contributions

[bky2020]

Hi I have a scorp and w2 myself with a solok. the employer solok contribution portion was over contributed by $5278.29 on 12/16/24. My under standing is I need to do a withdraw before 4/15 and claim the earning for 2024 on the scorp. a few questions

1. how do i calc the excess deferral earnings that need withdrawn? funds were put into a money market account and those rates are variable

2. do i need to file a 5330 form

3. any other filings required

4. any other steps to remedy this error

thx

[bky2020]

do i need to file a 1099-R from the solok

[DavidD66]

No, you do not file a Form 1099-R for an excess contribution made by the employer.  Neither do you remove the excess contribution.  Removing an excess contribution, including any earnings, issuing a 1099-R, and reporting the earnings on the excess contribution on your tax return for the year of the contribution is how you handle an employee excess salary deferral.

The excess employer contribution, or excess nondeductible contribution amount needs to remain in the solo 401(k).  It is carried forward and deducted in the following year(s). The excess contribution is subject to a 10% penalty for each year it is carried forward.

The penalty of 10% is reported by filing IRS Form 5330 - Return of Excess Taxes Related to Employee Benefit Plans.  Form 5330 must be filed by the last day of the seventh month after the close of the plan year.

It would be a good idea to consult with your Solo 401(k) plan administrator.

[tsears2250]

See link for more information on removing contributions based upon mistake of fact

Mistake of Fact Contributions