ADP/ACP refunds - 2 1/2 month deadline

[fiona1]

OK - so in order for an employer to avoid a 10% tax, ADP/ACP refunds need to be made within 2 1/2 months after the plan year end.

So for a 1/1/05 to 12/31/05 plan year, refunds need to be made by 3/15/06.

I have a few questions about the 2 1/2 months that I'm hoping someone can help me out - or point me to some regulations or guidance that verfies this...

First of all - is it technically 75 days after plan year end? Or is it 2 1/2 months?

If an employer has an 11/1 to 12/30 plan year, the deadline will be in February. Since there are 28 days in February, is the deadline 2/14? Or is it still 2/15? What about leap years when there are 29 days in February? Does that change the deadline?

I've tried my best to find information on this, but haven't had much luck. The examples in the ERISA outline book always reference 2 1/2 months and always use the 15th of the month in their examples. They have an 11/1 plan year example and they use 2/15 as the deadline.

What about plan anniversaries that don't start on the first of the month? For instance, a 9/10/04 to 9/9/05 plan year would have a deadline of what? Is this when you would use the 75 days?

HELP!

[MWeddell]

The deadline for making ADP test corrective distributions without incurring the 10% excise tax is 2½ months. Treas. Reg. 1.401(k)-2(b)(5)(i) and 54.4975-1(c ).

[fiona1]

Thanks for the response, but that does not answer my question.

I understand that the regulations state 2 1/2 months. I am looking for clarification on the rule.

For instance, on an 12/1 to 11/30 plan year, would the deadline be 2/14 or 2/15? If there are 28 days in February, then half of that month would be the 14th. On the leap years there are 29 days, so does that mean the deadline switches to 2/15 for leap years? Or is always 2/15?

And what about "odd" plan years? 9/10/04 to 9/9/05 is my example. How are you supposed to determine the "2 1/2" months? 1 month is 10/9/05. 2 months is 11/9/05. Then count 15 days to 11/24/05?

Or do you count 75 days from the plan year end? If you count 75 days from 9/9/05 you get to 11/23/05.

2 1/2 months is very vague. Is there not any guidance out there from the IRS regarding the 2 1/2 months?

I would really appreciate any help.

Thanks!

[MWeddell]

The PBGC has some rules about counting months, but I am not aware of any IRS guidance on that topic.