3943 / Is there a penalty if an employer contributes more to its qualified plan than it can deduct in a year?

Yes, if the plan is a defined contribution plan.

The penalty for making nondeductible contributions also applied to defined benefit plans until 2008. The employer is subject to a tax equal to 10 percent of the nondeductible amount (determined as of the close of the employer’s tax year) made to a defined contribution plan (e.g., a pension, profit sharing, or stock bonus plan, a simplified employee pension plan, or a SIMPLE IRA plan).¹

Nondeductible contributions are the sum of the amounts that the employer contributes to these plans in excess of the deduction limit for the taxable year plus the total amount of employer contributions for each preceding year that were not allowable as a deduction ( Q 3735, Q 3750, Q 3939, Q 3942).