412 Minimum funding and Plan Disqualification

[JGordon]

I have a Owner Only Cash Balance Pension Plan.  Plan was set up 12/28/2018 with effective date 1/1/2018.  2018 required funding was $80,486.  However contribution (made 9/13/2019) was $60,000.  So we have an minimum funding issue out of the gate.  Excise tax filed and paid (I believe).  2019 there is 0 cash flow to fund benefit and will result in another minimum funding deficiency for 2019 (this was known as of September, 2019 so is not COVID-19 related).  Have already reduced the benefit for 1/1/2020.  This Plan should have never been set up and completely fails the permanency requirement.

So my question here is whether 412 funding requirements apply to a disqualified plan?  Can I get the plan disqualified on permanency, terminate it and avoid a 2019 minimum funding excise tax on top of all the other tax?   

[Mike Preston]

Sorry, but the qualified status of the plan does not impact minimum funding or excise taxes.  The semi-good news is that the 2019 plan year contribution due date is extended by CARES to 1/1/2021, although it will be a bit higher than the amount due on 9/15/2020. Just have to work through the numbers to see whether it makes sense to incur the deficiency and excise taxes or borrow some funds out of the plan, fund as necessary and then terminate.  I wouldn't worry about permanency at this point because of COVID-19.