steelpot

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About steelpot

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  1. Forgive what may be an elementary question. A participant in a 457(f) plan had a substantial risk of forfeiture lapse. Normally, this plan is a vest-and-pay plan to conform to the 409A short term deferral rule, so any amounts subject to SROF in year 1 are paid out no later than 3/15 of year 2. The sole participant in the plan had a substantial risk of forfeiture lapse in Y1 but the amount was not paid out at all due to administrative error. My understanding is the amount that should have been paid in Y1 (or no later than 3/15/Y2) would have the following treatment: Entity issues a revised W-2 for 2015 showing the late payment amount Participant files revised 1040 showing same and pays: Interest on late payment Underpayment rate plus 1% (per Prop. Treas. Reg. 1.409A-4(d) Excise tax of 20% (per Prop. Treas. Reg. 1.409A-4(c)) Does this all seem right? Am I missing anything?