Dana contributes $2,000 too much to a § 401(k) plan but it is not returned within 2 1/2 months after the close of the tax year.The employer will have to pay a tax of $200.

Question

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If excess contributions to a § 401(k) plan are not returned within 2 1/2 months after the close of the tax year, the employer is subject to a 10% excise tax on the excess amount, which in this case is $200 on the $2,000 excess.

Dana Contributes $2,000 Too Much to a § 401(k) Plan