Contribution mistakenly booked to VEBA 9/14/04, rebooked 9/17/04

[Guest DBtech]

$8 million contribution for plan sponsor was inadvertently booked to VEBA on 9/14/04. Then offset and rebooked to pension fund on 9/17/04. Is it OK to use 9/14/04 date received on Schedule B?

May seem silly to ask, but in the SOX world....

[david rigby]

Ouch. Not sure. Perhaps you have given all the relevant facts, but if it were me, I would be scrutinizing the facts and cirmcumstances more. May also search for my own legal advice (not the plan's or the plan sponsor's atty).

[GBurns]

When were the funds available to the Pension Plan?

What caused the error? There would be a difference (to a nit picker) depending on whether the error was just a transcription type error, a wrong account number or it was some other sort of error.

In any case, using the 9/17 would be more appropriate unless it was the general thought that the money had gone to the PS and generally thought that it was available. In that case you are only correcting a simple posting error.

For a Scedule B, does it really matter, SOX or no SOX? It was in the same accounting cycle for the same amount for the same purpose.

[AndyH]

"For a Schedule B, does it really matter?"

What kind of comment is that? If 9/15 was for minimum funding, it means an excise tax of as much as $800,000 plus a loss of an $8 million tax deduction, plus a huge underpayment of taxes for the sponsor assuming a for-profit entity, plus a probable underpayment of PBGC premiums, etc.

Yes, the IRS would be a "nit picker" on this, let along the other government agencies. Both the DOL and PBGC would be interested. It might be a Form 200 reportable event to the PBGC and the penalties for late-filing can be severe.

[david rigby]

I agree with Andy. It matters.

However, consider a variation: sponsor sent the money to the trustee on 9/14, and the trustee made the "posting error", with correction 3 days later. Is the money contributed on time? I say yes.

[GBurns]

Why would there be an excise tax? The post was about "booking".

Why would there be a loss of deduction? All the entries are in the same accounting period.

Why would there be any underpayment of tax ? Which tax and why?

Why under payment to PBGC? The payment for that period would have included both dates and so would not show nor should the date really matter.

Why would there be late filing?

[AndyH]

Presuming that the plan is a calendar year plan and the contribution is required to meet mininum funding standards, if the contribution would be properly reported on 9/17, it could not be reported on the Schedule B for the prior year and could not be credited for the prior year. To be credited, it must be reported as having been made by 9/15. If it was intended for the prior year but not creditable until 9/17, there would be a funding deficiency for the prior year generating the mayhem that I refer to.

Whether it is properly reported as 9/15 versus 9/17 makes a huge difference.

The original reference to being "booked" needs to be clarified. An internal accounting notation is not meaningful.

[Effen]

I agree w/ Pax & Andy that it could matter a great deal, but as GBurns points out, the original message said the contribution "was inadvertently booked". I, like Andy, assumed he meant, "contributed", but he could be just talking about internal bookkeeping, which is a whole different deal.

I think we need a clarification from DBTech, who may need to be a little more "technical". Was the amount actually contributed to the VEBA or just “booked” to the VEBA?

[GBurns]

DBtech,

Would you also clarify whether this was a Quarterly required installment or it was funding for the plan year under a filing extension.

[AndyH]

GBurns, I regret my comments being a bit harsh. I can see that you may have interpreted the question differently than I did. Sorry about that. One should resist the urge to comment sometimes following a tough day.

[Blinky the 3-eyed Fish]

Andy, keep your chin up. I am hugging my monitor right now pretending it is you. BTW, I am surprised you didn't get a lashing.

[GBurns]

Who me? Lash? Never!!

Lashings should be reserved for those who repeatedly and knowingly give bad advice, incorrect or irrelevant cites and misquotes. Differences in interpretation, opinion and reference sources, make for good discussion. Writing style is not an issue, it is just something to live with.

AndyH,

I found nothing harsh in any of your comments.

[AndyH]

Blinky, you whipped up a thought that proved worthwhile. Glad I found this site. Might come in useful some days, especially if these Boards get slow.

"New, Improved Unsolicited Opinion Spouting Web Area "

http://flog.phooeyhoo.com/