2011 Contribution Deadline - 9/15/12 or 9/17/12

[carrots]

Since 9/15/12 is a Saturday. Does a DB plan get until 9/17/12 to make a contribution for the 2011 plan year?

[SoCalActuary]

Form extensions go to next business day, but not contribution requirement for minimum funding.

Get the check written by Saturday and it can be deposited on Monday.

[mbozek]

Form extensions go to next business day, but not contribution requirement for minimum funding.

Get the check written by Saturday and it can be deposited on Monday.

IRC 7503 extends the time for performing any act prescribed under the IRC which falls on a sat. sun or holiday to the next business day.

[frizzyguy]

§ 7503. Time for performance of acts where last day falls on Saturday, Sunday, or legal holiday

When the last day prescribed under authority of the internal revenue laws for performing any act falls on Saturday, Sunday, or a legal holiday, the performance of such act shall be considered timely if it is performed on the next succeeding day which is not a Saturday, Sunday, or a legal holiday. For purposes of this section, the last day for the performance of any act shall be determined by including any authorized extension of time; the term “legal holiday” means a legal holiday in the District of Columbia; and in the case of any return, statement, or other document required to be filed, or any other act required under authority of the internal revenue laws to be performed, at any office of the Secretary or at any other office of the United States or any agency thereof, located outside the District of Columbia but within an internal revenue district, the term “legal holiday” also means a Statewide legal holiday in the State where such office is located.

I think that your client has until Monday to contribute.

[david rigby]

Some other perspective (ie, Sal Tripodi) sees this as a gray area. See the discussion of "Weekend/Holiday Rule" in the ERISA Outline Book (for example, begins on page 1A.215 of the 2011 edition). In particular, see paragraph B.1.a "IRS informal ruling on minimum funding deadline".

[mbozek]

Some other perspective (ie, Sal Tripodi) sees this as a gray area. See the discussion of "Weekend/Holiday Rule" in the ERISA Outline Book (for example, begins on page 1A.215 of the 2011 edition). In particular, see paragraph B.1.a "IRS informal ruling on minimum funding deadline".

IRC 430(j) (1) provides that due date for payments of any minimum contribution shall be 8 1/2 months after close of the plan year which is Sept 15. IRC 7503 extends the date for the contribution to Sept 17. IRS Pub 509 confirms that the time for performing any act under the IRC which falls on Sat, sun or Holiday to next business day. IRS caused confusion by issuing RR 83-116 limiting extenson only to filing of tax returns.

We have had this discussion before and it boils down a rejection by the Tax Court of the IRS position in 83-116 that the extension of time permitted by 7503 applies only to the collection or refund of taxes, e.g., filing of a tax return. See E-B Grain Co v. Commissioner of IRS, 81 TC 70 and Synder v Commissioner of IRS, TC Memo 1981-216.

[Mike Preston]

Yes, but the IRS has refused to acquiesce. If you are going to wait until Monday you should at least know that, on audit, the IRS will start down the path of saying it was late. How far they will go is unclear.

[mbozek]

Yes, but the IRS has refused to acquiesce. If you are going to wait until Monday you should at least know that, on audit, the IRS will start down the path of saying it was late. How far they will go is unclear.

If the IRS refues to acqueiese then it is contradicting the language of Pub 509 as well as the literal language of IRC 7503. RR are not valid precedent to contradict an IRC provision.

Pub 509:

Saturday, Sunday, or legal holiday. Generally, if a due date for performing any act for tax purposes falls on a Saturday, Sunday, or legal holiday, the act is considered to be performed timely if it is performed no later than the next day that is not a Saturday, Sunday, or legal holiday. These calendars make this adjustment for Saturdays, Sundays, and federal legal holidays. But you must make any adjustments for statewide legal holidays.

An exception to this rule for certain excise taxes is noted later under the Excise Tax Calendar.

I really dont understand the need for 2 extra days to make the contibution but if they dont want the check to be deposited until the 18th then mail it to the trustee on the 15th by certifed mail.

[carrots]

The problem had to do with moving money from a business account into the DB account, and whether or not the financial institution could get it done in time. After SoCal's comment, I advised the client to urge the financial institution to move the funds as soon as possible. As it turned out, the funds were moved yesterday!

Thanks, everyone - interesting discussion!

[Craig Jacobs]

For those who believe the plan has until the following Monday to make the contribution, how do you get around Gray Book 1995-9? That seems to indicate the opposite.

[david rigby]

For those without a copy, here is Gray Book 95-8:

QUESTION 1995-8

Funding -- Contribution Due Date if Occurs on Non-Business Day

When the filing date of a tax or plan return would fall on a Saturday, Sunday or Public holiday, IRC 7503 provides that the due date is extended until the next business day. Does such extension also apply to the due dates for contributions under IRC 412? For example, April 15, 1995 falls on a Saturday? This issue has become even more relevant under the RPA, since a 10% excise tax can be imposed on a quarterly liquidity requirements that is only one day late.

RESPONSE:

The grace period for weekends and holidays found in code section 7503 applies only with respect to filing, not with respect to contributions. Also, minimum funding is not only a Code provision but also an ERISA Title I issue. Title I does not include provision comparable to Code section 7503, so even if the weekend rule did apply to the Code minimum funding requirement, it does not apply to the similar requirements in ERISA Title I.

Copyright © 1995, Enrolled Actuaries Meeting

All rights reserved by Enrolled Actuaries Meeting. Permission is granted to print or otherwise reproduce a limited number of copies of the material on the CD-ROM for personal, internal, classroom, or other instructional use, on the condition that the foregoing copyright notice is used so as to give reasonable notice of the copyright of the Enrolled Actuaries Meeting. This consent for free limited copying without prior consent of the Enrolled Actuaries Meeting does not extend to making copies for general distribution, for advertising or promotional purposes, for inclusion in new collective works, or for sale or resale.

[frizzyguy]

For those who believe the plan has until the following Monday to make the contribution, how do you get around Gray Book 1995-9? That seems to indicate the opposite.

I hardly think that the IRS can reference the gray book upon audit. It is a book given out only to enrolled actuaries at a conference and doesn't fit any where in the pecking order of rules that govern plans. Also, funding dates apply to all qualified plans. How is a DC consultant expected to reference this book.

Just my opinion though. You can maybe make the arguement (BIG MAYBE) that you can use the Gray book for actuarial topics but that's still a stretch.

Also my opinion, I tell clients they have until 9/15 but if they funded on the 17th I'll still put it down on the 5500. If the IRS throws a tizzy it's really easy to reference the code that was discussed in this thread.

[Mike Preston]

As long as you know the IRS position and are willing to advise your client to ignore it, then at least you are making a conscious choice.

[david rigby]

Perhaps it's just me, but the IRS comment about Title I seems to be pretty important, if you are trying to dot i's and cross t's.

In the real world, it seems unlikely either agency will care about this point (they have much bigger fish to fry). Prudent advice to the plan sponsor will probably err on the conservative side.

[Mike Preston]

The problem is that it is the enrolled actuary who must sign the Schedule SB, not the client. Would the Joint Board object to an actuary including a contribution made on 9/17/2012 in the contributions reported for 2011 on the 2011 Schedule SB?

Remember, the actuary is supposed to check the box if the statement which follows is true:

If the actuary has not fully reflected any regulation or ruling promulgated under the statute in completing this schedule, check the box and see instructions

The question is whether the citation earlier in this thread constitutes a ruling. Seems like the title (Revenue Ruling) indicates that it does. Note that it doesn't matter that a court has disagreed; the issue is whether the IRS has issued a subsequent ruling walking away from its position. If it hasn't, doesn't the actuary have to check the box?

[mbozek]

For those who believe the plan has until the following Monday to make the contribution, how do you get around Gray Book 1995-9? That seems to indicate the opposite.

IRC 7503 expressly extends the time for performing ANY act required under the IRC to the next business day which has been confirmed by at least two court decisions. As for the DOL deadline for plan funding I thought under Reorganization plan #4 of 1978 the authority to issue regulations under Parts 2 and 3 of Subtitle B of ERISA were transferred to the IRS. The funding provisions of ERISA 303 correspond to IRC 430. Therefore IRS regulations governing the timing of when contributons must be made to the plan under IRC 7503 apply to the time contributions must be made to a plan under ERISA 303(j).

There is no need for the IRS to create confusion on a simple question of when contributions must be made instead of following the literal provisions of IRC 7503 as applied by the courts to extend the time for making contributions to the next business day after the 15h. To avoid any questions of timeliness, plan sponsors should make plan contributions by the 15th day of the month or if they want more time send the contributions by certified mail return receipt requested to the trustee on the 15th which will add 3 or more days before the check is delivered.

[Guest adric]

Form extensions go to next business day, but not contribution requirement for minimum funding.

Get the check written by Saturday and it can be deposited on Monday.

[SoCalActuary]

For those who believe the plan has until the following Monday to make the contribution, how do you get around Gray Book 1995-9? That seems to indicate the opposite.

IRC 7503 expressly extends the time for performing ANY act required under the IRC to the next business day which has been confirmed by at least two court decisions. As for the DOL deadline for plan funding I thought under Reorganization plan #4 of 1978 the authority to issue regulations under Parts 2 and 3 of Subtitle B of ERISA were transferred to the IRS. The funding provisions of ERISA 303 correspond to IRC 430. Therefore IRS regulations governing the timing of when contributons must be made to the plan under IRC 7503 apply to the time contributions must be made to a plan under ERISA 303(j).

There is no need for the IRS to create confusion on a simple question of when contributions must be made instead of following the literal provisions of IRC 7503 as applied by the courts to extend the time for making contributions to the next business day after the 15h. To avoid any questions of timeliness, plan sponsors should make plan contributions by the 15th day of the month or if they want more time send the contributions by certified mail return receipt requested to the trustee on the 15th which will add 3 or more days before the check is delivered.

MB, please bring this up with the ASPPA Govt Affairs Cmtee. They might be able to get either DOL approval or Congressional correction to this issue.

If your plan is not subject to DOL jurisdiction under Part I of ERISA, then you interpretation would be safer. Otherwise, I hold to my earlier position on all Title I plans.

[david rigby]

Agreed. Ambiguity on this subject is unacceptable.

[frizzyguy]

I completely agree. Can you also ask about EOY valued DB plans, clarification of 2000-40 in a PPA world (particularilly switching from EOY to BOY wihtout approval), and whether or not a client can file taxes before they actually make their contribution?

Any others anyone wants to get answers to?