What does the IRS consider a mistake of fact for purposes of returning employer contributions?

Generally arithmetical or clerical errors.
Bear in mind that according to congress, such a mistake is very narrowly defined. If a plan is found to use the mistake in fact reason when it does not apply, it could lead to plan disqualification.

I agree with Appleby. You can take a look at PLR 9144041 for some background. If it is a DB plan, as opposed to a DC plan, you may be able to get it back out if you qualify under Revenue Procedure 90-49.

A copy of PLR 9144041 is attached.

Thanks for the responses. This has been helpful.

Under ERISA 403©(2) a mistake of fact also includes excess contributions which exceed the deductible amount and contributions to a plan which fails to qualifiy under IRC 401(a) provided that the contributions are refunded within one year of deduction.

mbozek,

Not necessarily- refer to IRS Notice 89-52. A contribution in excess of the deductible limit (though unintentional) is NOT a mistake of fact.


Regarding the 401(a) issue, this is only if the IRS disallows the deduction for the contribution.

then try PLR 9107033 -make it a contribution for the current year.
Also see if Rev rul 91-4 works.

OK

Revenue ruling 91-4 , in addition to the reasons I mentioned above, also provides the contribution to be returned to the employer, if the contribution is made in the first year of the plan and is contingent on the plan's receiving a favorable determination letter from the IRS, and the IRS denies the plan's qualified status .


PLR 9107033 and IRS publication 560, states the contributions in excess of the deductible amount should be carried forward to the next year- if the amount carried forward exceeds the deduction amount for that year, the carry forward should continue until the excess amount is used –up.

Can anyone provide a link to Revenue Ruling 91-4?

Thanks.

PAL

http://www.taxlinks.com/rulings/1991/revrul91-4.htm

I agree with Appleby.

Thanks!

Should amounts returned to the employer due to a 'mistake of fact' be reported on Form 1099-R?

Thanks in advance

Should those amounts be reported on the Form 5500?

Form 5330 to report a reversion?