Failed ADP Test: $6 refund

[Guest notapensiongeek]

I just ran the ADP test for PYE 12/31/2005 and the test fails. One HCE is due a refund of $6.04. Even though the refund is less than $10 (and no Form 1099-R will be issued) we will still make the distribution of $6.04.

Since this distribution is occuring after March 15th (2 1/2 months after the close of the plan year), do we have to pay the 10% excise tax? After rounding, the total is $1.00. I think the right thing to do would be to pay it, but it is an awful lot of work for such a minimal amount.

Any thoughts on this? Any input would be greatly appreciated.

Thanks!!

[E as in ERISA]

I assume IRS doesn't care. What is penalty for not filing? Lesser of $100 or tax? In which case bill would be $1.20. Rounded down to $1? Plus pennies in interest. No down side to delaying?