Sick Plans

[Guest brownbag]

In need of suggestions. I have a sick plan that needs attention. The plan is currently a dual plan, money purchase-profit sharing combo. The intention was to merge the money purchase into the profit sharing plan during 2002 and file a final 5500 for 2002. The amendment and notice was provided in a timely manner. The problem is that the money purchase plan has a funding deficiency of about $7000. The company is a C-corp with the owner employed under a sole prop. When it came time to deposit the 2001 contribution, the CPA informed us that the sole prop did not have the money to fund it’s part of the contribution. In addition to the plan being sick, the owner is currently undergoing Chemo and I’m not sure of the prognosis. The client did not submit a census for 2002 or the value of one of the CD’s in the plan. So, the 5500 that was filed for 2002 was inaccurate. The 5330 was prepared for 2001 but I’m not sure if the client filed the form and paid the penalty. I also prepared a 5330 for 2002 with the outstanding funding deficiency. I was thinking of filing a 5310-A and transferring the liability to the Profit Sharing plan. Does anyone have a better suggestion?

You can’t see me, but, I’m wearing a brown paper bag over my head with eye holes cut out.