DocumentDiva Posted July 26, 2016 Share Posted July 26, 2016 we have an ongoing debate in our shop on whether lost earnings on late deposits should be deposited as a contribution to the impacted participant OR as earnings? I've always had these deposited as earnings and I'm now being told they are a contribution to the participant. I feel silly debating the issue when I feel like the answer is in the what we call them "lost earnings". Link to comment Share on other sites More sharing options...
Lou S. Posted July 26, 2016 Share Posted July 26, 2016 Earnings. Otherwise how could you possibly make them for someone at the 415 limit? ErisaGooroo 1 Link to comment Share on other sites More sharing options...
RatherBeGolfing Posted July 26, 2016 Share Posted July 26, 2016 Earnings. Otherwise how could you possibly make them for someone at the 415 limit? The argument, as I have seen it before, is that the earnings portion is deposited as a QNEC contribution. We do them as earnings, and I have never had an issue with the DOL, IRS, or an auditor (for large plans) doing it that way. I have taken over plans where earnings and contributions due to lost deferral opportunity was deposited as QNEC. Link to comment Share on other sites More sharing options...
rcline46 Posted July 27, 2016 Share Posted July 27, 2016 Make up contributions (failure to withhold) could be a QNEC, but earnings are earnings. K2retire and Bill Presson 2 Link to comment Share on other sites More sharing options...
Jim Chad Posted July 27, 2016 Share Posted July 27, 2016 Agreed. Earning are earnings. Bill Presson 1 Link to comment Share on other sites More sharing options...
Tom Poje Posted July 27, 2016 Share Posted July 27, 2016 I suspect in many cases they might show up at the asset house as a 'contribution', but they are still earnings Eve Sav, hr for me and K2retire 3 Link to comment Share on other sites More sharing options...
Jim Chad Posted July 29, 2016 Share Posted July 29, 2016 I agree with Tom. I have seen it show up as a contribution. But on an audit, I would have no problem explaining why I did not count earnings in the 415 limit. Eve Sav 1 Link to comment Share on other sites More sharing options...
K2retire Posted July 29, 2016 Share Posted July 29, 2016 I am told that some record keepers can only post incoming deposits as contributions. Empower assures me that when they do that it is not included in the contribution total for 402(g) or 415 purposes. Not sure if they all keep that straight or not. Link to comment Share on other sites More sharing options...
DocumentDiva Posted August 2, 2016 Author Share Posted August 2, 2016 Thank you everyone for your input. I agree that I've seen the record keeper include it as a contribution even when I submit them as earnings and I still count them as earnings and would explain the same to an auditor. Link to comment Share on other sites More sharing options...
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