g bennycon

This seems to be an area of great confusion. I can only provide the information that I have found. The Revenue Procedure cited in the attachment Revenue Procedure 2013 - 12 is the latest version of EPCRS, in that document the IRS states that in matters involving excise tax if the revenue procedure does not specifically address the situation, then EPCRS cannot be used. The failure to deposit salary deferrals and loan payments is a violation of IRC Section 4975. The lending of money between the plan and the employer is a prohibited transaction loan. This prohibited transaction can only be corrected by repayment of the amount involved and the filing and payment of excise tax on the form 5330. The IRS issued Revenue Ruling 2006 -38 to deal specifically with the issue of late deposits and their correction. In that Revenue Ruling the IRS states that using the Section 6621(a)(2) rate is appropriate to calculate the amount involved. The Department of Labor calculator uses the cited code section for it's calculations. Based upon everything that I have been able to find, the use of the DOL calculator seems appropriate. A recent review of the 401(k) Fix-It guide indicates that EPCRS correction procedures would only be appropriate if your plan document contains a provision that specifically states the number of days by which the deposit must be made. In that case the violation is a failure to follow the plan document and the lost earnings section of the procedure would be applicable.

Thank you for responding. The DOL calculator is actually the IRC Section 6621 underpayment rates for the periods you are correcting and can be used to determine the amount involved in preparation of a 5330.

That is part of my confusion. The link you site is from October 2014. If you go to the IRS site now and search late deposits a new fix it page comes up dated 2015 which states that you can only use EPCRS if you plan provisions expressly state the due date for timely deposit. The violation is failure to follow the plan document. According to this 2015 page if the plan does not have that language you follow the rules applicable to the violation of IRC 4975 prohibited transactions.

I hope that someone can help me. I need to correct 11 late deposits and I was reviewing the process. In September 2014 I attended an ASPPA webinar on the topic Late Deposits by Janice Wegesin. In her presentation she said that you have to use the Plan Earnings rate in computing the lost earnings. I knew about the IRS deficiency rate which I believe is the DOL calculator and the Restoration of profits, but the Plan Earnings rate is new. Can anyone tell me where in IRS or EBSA published guidance the use of the Plan Earnings rate is found?

I believe there are 3 issues that need to be investigated: 1. As previously stated has the plan been communicated to the employees? 2. Has the Safe Harbor Notice been provided for the first plan year? 3. Has the plan ever filed a 5500 Form? The filing of the 5500 Form is the most critical item because it places the plan on the IRS and EBSA systems. If the plan has never filed a 5500 and not been communicated to NHCE employee participants, then it could be interpreted as a error. The IRS and EBSA would have no idea what happened unless an employee contacted them. If a 5500 has been filed then the correction would involve the EPCRS procedures.

Is there a Participant Statement requirement for those Participants who are entered as a Code D on a 2009 8955 – SSA Form?