Late contribution of deferrals

[Guest jmlumpkin]

Employer had late deposit of employee deferrals during 2002. Accordingly, lost gain was calculated and allocated to each participant who had deferrals during that period. The amount was fairly minimal, so most participants received $.01. However, when making the contribution for the lost gain, it was discovered that many participants had terminated and received a distribution. The investment company will not open an account for a participant to invest $.01.

Does anyone have any ideas as to how to apprcoah this? My initial thought is to dump into forfeiture account. Any thoughts are welcomed.

[Blinky the 3-eyed Fish]

Round off to zero.

[Guest Pensions in Paradise]

Section 6.02(5)(b) of Rev. Proc. 2003-44 states "If the total corrective distribution due a participant or beneficiary is $50 or less, the Plan Sponsor is not required to make the corrective distribution if the reasonable direct costs of processing and delivering the distribution to the participant or beneficiary would exceed the amount of the distribution."

[Harwood]

Re: Section 6.02(5)(b) of Rev. Proc. 2003-44

Is that perhaps talking about forgoing distributing small amounts only if the undistributed amount stays in the plan in the Participant's account? I don't think it allows a plan to reabsorb amounts of lees than $50.

[Blinky the 3-eyed Fish]

I haven't looked at the Rev. Proc., but 1 cent is 1 cent and absolutely immaterial for any purpose concerning a qualified plan.