Employer Contributions Due the Plan

[austin3515]

Scenario a) two participants inadvertently did not receive an allocation of the employer's profit sharing contribution, and it is now well past the extended due date of the employer's tax return.

I used to think this was a deemed loan to the Plan. Now I'm reading that employer contributions are not plan assets until contributed. Rather, the Plan document is enforceable as a contract, so the employer can be forced to contribute, but the foregone contributions are not plan assets. If the foregone contribution is not a plan asset, then no prohibitted transaction can exist, right? Therefore, in this scenario the excluded participants would definitely get the foregone contribution plus earnings, but there would not be a prohibitted transaction. Am I right on this?

Scenario b) Same as above, except the entire profit sharing contribution was remitted three months after the extended due date of the employer's tax return. Prohibitted transaction? Based on above I'd say no...

There appears to be no guidance whatever on this published! Please provide references if possible!!

[Kirk Maldonado]

There was an extended discussion on this topic in the past few weeks or so. You should be able to find it using the search function.

P.S. It triggered a lively debate.