Funding Deficiency

[nancy]

If an employer makes his deposit timely, but the broker deposits to the Profit Sharing Plan and the error is not discovered until after September 15, does a funding deficiency exist? Is there any remedy for this?

[Effen]

TREATISE, PENSION-ANSWER-BOOK, Q 12:6 May an employer make a timely contribution to the qualified retirement plan by check?

The contribution will be considered timely even if the plan trustee receives payment after the deadline for a deductible contribution (see Q 12:2) if the employer mails the check to the plan trustee before such deadline, the check is promptly presented for payment, and it is paid in the regular course of business. However, the contribution is not timely if the trustee delays presentation of the check because of the employer's financial problems. Also, the contribution was not considered timely in one case because the employer could not explain why the check was not negotiated until two weeks after the contribution deadline. [Flomac, Inc, 53 TCM 305 (1987); Walt Wilger Tire Co, Inc, 38 TCM 287 (1979); Cain-White & Co, Inc, 37 TCM 1829 (1978)]

If the check bounces, no contribution is deemed to have been made. [springfield Productions, Inc, 38 TCM 74 (1979)]

[david rigby]

Very reasonable answer. I would go with that.