MP contribution Mistake

[Guest moltengater]

Not for profit Organinzation sponsors a money purchase plan. The employer errored in calculating the MP contribution and under-deposited aprrox. $10,000 into the plan.

Plan Year End = 09-30-2005

Company Year End = 12-31-2005

1. Does if matter that they are a not-for profit company when determining if 5330 is due?

2. Assuming 5330 is due - isn't it late? Wouldn't the original 5330 would have been due 7/31/2006?

2a. If it is late - what can I do other than wait for the IRS to send notice of penalty and interest?

3. If they have to pay the excise tax - should they now file

a. One 5330 for the initial $10,000 * 10% = $1,000 excise tax.

If I'm reading the ERISA Outline book corretly - doesn't the $10,000 funding defiency carry over and become part of the minimum funding for the plan year ended 09-30-2006 - and as long as this $10,000 is paid in within the 8 1/2 period following the end of the 2005 plan year <ending 09-30-2006> than there is no additional excise tax?

EARNINGS

Finally, the employer wishes to make the deposit to correct the missing contribution ASAP - am I assuming correctly that they must also allocate earnings on the late deposit? If yes, from what date should the plan base lost earnings on? They origianlly deposited 95% of the contribuiton back in January of 2006 - if it weren't for the miscalculation they would have deposited the whole amount in January 06 - should they be the date to use for a lost earnings calculation?

Can we use the DOL calculator to determine the lost earnings, or must we use some other method - i.e. one of the federal rates or highest rate of return for any plan fund?