From www.smsfadviser.com: Members with excess concessional contributions have two options: they can request the trustee to refund the excess contributions or allow them to remain in the fund, which may subsequently count towards their non-concessional cap.

The ATO will issue a notice to the member once excess contributions are identified, leading to taxation at marginal rates with a tax offset.

A reserving strategy may be employed if the lump sum payment occurs at the end of the financial year, delaying the contribution’s allocation for cap purposes.