March 15th Deadline

[justatester]

Hi All,

We seem to run into this topic every few years. March 15th falls on a Sunday in 2009. I seem to recall this is one of the few deadlines that does not get extended to Monday. So that means all distributions would need to be processed by Friday, March 13th.

Does this sound correct?

Thanks for your input!

[BG5150]

From what I remember, 2 1/2 months means 2 1/2 months. It never mentions business days. We always tried to get things out by the last business day w/in the 2 1/2 months. Which, in this case, means the 13th.

[david rigby]

From what I recall, a due date for any IRS filing that falls on a weekend or holiday is automatically extended, but any other due dates are not.

[BG5150]

This is from The ERISA Outline Book:

2.b.4)What if the 2½ date falls on a weekend or holiday? The regulations do not address whether the 2½ month period is extended if it ends on a weekend or holiday, pursuant to IRC §7503. For example, March 15^th was a Saturday in 2003. This was the 2½-month date for correcting ADP violations and ACP violations for a plan year ending December 31, 2002. In Rev. Rul. 83-116, the IRS concludes that where an act is not in connection with the determination, collection, or refund of taxes, IRC §7503 does not apply, and any extension for a weekend or holiday would have to be expressly granted in the particular statutory provision that applies or by regulation. If the IRS position is correct, a corrective distribution made on Monday, March 17, 2003, for the plan year ending December 31, 2002, would be treated as made after the 2-1/2 month period, resulting in 2003 taxation to the employee and an excise tax on the employer.

However, elsewhere in the book it makes this argument:

A failure to make timely corrective distributions results in additional tax liability to the participant and, in the case of corrective distributions under IRC §401(k)(8) and IRC §401(m)(6) that are made more than 2½ months after the close of the plan year, the failure results in an excise tax under IRC §4979. A failure to adopt a plan by the last day of the employer's tax year precludes a deduction for the employer's contribution for that year, pursuant to Rev. Rul. 81-114. The argument appears stronger in the context of actions that result in specific tax liability, such as an excise tax, if performed after a certain date.

Which of course leads to the usual caveat (emphasis mine):

Taxpayers will need to make their own determinations regarding the applicable deadline until IRS issues more formal guidance. The "safe" approach would be to ensure that the action is performed by the normal deadline, and complete the action by the last business day preceding the deadline if the deadline falls on a weekend or holiday.