Correction of SIMPLE IRA plans

[Guest HRlawguy]

Has the IRS extended the EP Compliance Resolution System to SIMPLE IRA Plans, or provided any other guidance on correcting defects in such plans? I've been contacted by a small company that appears to have both design and operational defects extending back to 1999, involving both failure to contribute and excess contributions. Since these involve IRA accounts, it's not clear to me how an employer could correct excess contributions with employee cooperation. Also, if EPCRS applies, I'm not sure how one calculates appropriate returns for determining corrections for failure to contribute. Thanks for any direction or suggestions.

[Steve72]

Section 2.02 of Rev. Proc. 2001-17 states that the IRS is considering implementing a similar procedure for SIMPLE IRAs. I have not seen anything that states they have moved beyond the consideration stage, however.

[mbozek]

Excess contributions are subject to a excise tax- but consider it to be a contribution for the suceeding year. What was not contributed ? employee or employer contributions? Since the IRA is owned by employee Employer cannot invade account.

[Guest HRlawguy]

Employer contributions for employees making less than $5,000 were not given the 2% contributions (the employer having adopted that option without having thought about the possibility of $13.27 IRA accounts).