Question -

A small money purchase pension plan fails to make it's minimum contribution of $30,000 by the deadline of 9/15. The contribution is then made on 9/18.

I understand that the contribution deduction will be dissallowed, but will a 5330 need to be filed and will the excise tax be $3,000 for the 3 days in question?

Thanks,

Ronnie Wasel

Are you referring to 9/18/01? There is relief for late contributions due to the 9/11 attacks through 9/24.

See IRS Announcement 2001-103 (which allows inclusion of late contributions in the 5500 filing) and 2002-7 (which waives excise taxes).

Actually, I'm referring to the year 2000.

My understanding is that "late" is late. I am not familiar with any circumstances under which the IRS will grant a short extension.

If it is late, then that means it was not made for the appropriate plan year. Sounds like a funding deficiency to me, which automatically becomes part of the next year's funding requirements. And yes, that means that a Form 5330 is required. BTW, expect the IRS to assess penalty (and interest) for the late filing.

You can download the 5330 and instructions here: http://www.irs.gov/forms_pubs/forms.html

Thanks for the reply. That brings up my follow up question:

This contribution was for the 1999 plan year and was to be made by 9/15/2000. It was made consequently on 9/18/2000.

Should there then be 2 form 5330's filed for this incident. One for 1999, and then one for 2000?

Or should there just be one filed for 2000, since it occurred in 2000 and it was "corrected" shortly after?

Thanks,

Ronnie

You might have two late contributions, which would lead to needing two 5330's. The contribution on 9/18/2000 becomes a contribution for the 2000 plan year, but there might also be an additional contribution requirement for that year.

Well actually here is the whole detail:

Employer submits the employer contribution for 1999 on 9/18/2000.
Consequently, this contribution is not made in a timely fashion by the
due date of 9/15/2000. Therefore, a form 5330 must be filed for the
violation of the minimum funding. The 2000 contribution was made in full and in a timely fashion.

Questions - When preparing the forms 5330 should there be one filed for
1999 since this was the plan year in which the contribution should be
made and then consequently file one for 2000 the year in which the
correction was made?

Or should just one 5330 for 2000 be filed since this was the year in
which it should have been made and then consequently made and
"corrected" a few days later?

Thanks,


Ronnie Wasel

In addition to the minimum funding excise tax, is the late contribution also an "extension of credit" to the employer? Thus, a prohibited transaction.