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Excess contribution problem for 2025 plan year
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1 Reply
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I’m on extension to file Form 1065 for 2025 which ends this Wednesday 9/15/26. I have ended up with excess contributions for 2025. I want to know how to fix it. Here is what happened:
1. My wife and I are the 2 51%-49% partners in an LLC. Accountant worked up a draft of Form 1065 for our LLC taxed as a partnership. Both partner’s K1’s were over the $77500 limit for 2025 with 7500 catch-up, so I topped off everything to the maximum via the in-plan conversion of voluntary after-tax to Roth.
2. Two days later the accountant shows me Draft #2 which has lower income numbers.
Problem #1: I’m still over 77500 but my wife is not. So now the total of pre-tax plus after-tax of 77500 is over her income.
Problem #2: For both of us, the Employer Profit Sharing contribution for 2025 is in excess of the max for the new and lower K1 income numbers.
Problem #3: I have already reported the amounts toMySolo401K for in-plan conversion of After Tax to Roth for both partners.
Questions:
1. Can I simply characterize any excess of the total Employer Profit Sharing contribution paid in 2026 for 2025, as a 2026 contribution MADE IN 2026 by the LLC? if it is OK to make contributions for 2026 in 2026 (rather than 2027) can I take this approach with respect to characterizing any Employer Profit Sharing contribution excess?
2. Can a plan do multiple incremental in-plan conversions in a given plan year? If so, can I characterize any excess of the voluntary after-tax contribution made in 2026 for 2025 as a partial in-plan conversion for 2026 and EXECUTED IN 2026?
If the answers to Questions 1 and 2 is YES then that is what I will do. If the answers to 1 and 2 above is NO then I need some advice on what to do with these excess contributions that have been created: the excess Employer Profit Sharing contribution paid in 2026 for 2025, AND the total pre-tax and after-tax contributions that are in excess of my wife’s K1 income which is about 72K and under the limit.
Thanks for any help you can provide !! The extension deadline is 9/15 and I am requesting help !!
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I’m sorry for your trouble on this. I can’t speak from experience since I have fortunately avoided any over contributions thus far. However, to your question #1, that would be great if it could work. I would ask what in any of that has been reported by now? If you are able to internally “adjust” your records to move some to 2026 so that 2025 is in compliance I’m not sure how that is a problem if 2025 hasn’t even been reported, yet. But, I am no expert on this.
As for your second question, you seem to be discussing conversions. You can do multiple conversions in a year, but each conversion happens in the year in which it happens. That is, a conversion in 2026 of funds contributed in 2025 doesn’t matter when the funds were contributed, it is a 2026 conversion. So I’m not sure I see how this makes any difference to your issue. Conversions have no bearing on contributions other than you can’t do a conversion if you don’t have any funds to convert.
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