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An excess contribution occurs when the salary deferrals or matching contributions of highly compensated employees are higher than the amounts permitted by federal law.
If that happens, the company must pay out those amounts to the employees involved before the end of the following tax year or face penalties.
Excess contributions are different from excess deferrals, also called after-tax contributions, which employees may legally make to their employer sponsored retirement plans.Yahoo Finance - Cite This Source - This Definition
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