Correction Method: PS contribs did not use permitted disparity

[Guest Iwonder]

Profit Sharing contributions were made on a comp. basis but the plan provides for permitted disparity.

Profit Sharing contributions were made qrtly but the plan says year-end.

Any suggestions on where to start to fix this?

We understand a correction is necessary, but this goes back years.

Thank you

[Jim Chad]

If it is a calendar year plan, I would think you would do a true up for 2007, the same way you would do a true up for a match. And then maybe use EPCRS for previous years.

As for prior years, is this a small plan where only the owners got shorted?

If yes, I might consider preparing an amendment and put a current signature date on it. There is no statutory basis for this. I am going on the idea that someone thinks this was changed years ago and you can't find the amendment. On a recent audit, we could not find a document anywhere. I am happy to say that the audit was for the year before I took over. We asked the IRS ayditor what to do. This was a plain 8% of pay MPP. She said that the document I did for the year after audit was "OK" . She did not like it, but it was the best that we could do. You may want to run this idea by the IRS anonymously.

....or consult an ERISA attorney.