2009 Contributions in 2008?

[emmetttrudy]

A DB Plan contributed $100,000 in 2008. When the valuation was finalized the required contribution was only $80,000. They would like to apply the additional $20,000 towards the 2009 contribution. Can they do this? Would it not be reflected on the Schedule SB since it is not a 2008 contribution, but a 2009 contribution?

[david rigby]

A contribution cannot be made for a plan year prior to the beginning of that plan year.

But, if the IRS has changed its position on this, I hope someone will tell us.

[Andy the Actuary]

For funding, IRC 436, contribution sounds as if it would be an excess contribution that the employer could elect to add to the prefunding balance for 2009 in accordance with the fules. Then, the employer could apply this PFB for 2009 provided FTAP for 2008 >=80%.

It is worth an edit to note that the election to add to the 2009 PFB must be made by the filing due date, including extensions, for filing the 2008 5500. The election to apply the 2009 PFB to reduce the 2009 contribution, however, must be made by the end of the 2009 Plan Year, and not the filing due date of the 2009 5500. Someone please comment if you disagree with this note.

[Guest Sieve]

Andy -- I hate to intrude during a serious conversation, but aren't "fules" what you call the government's agents holding to a position contrary to your client's position? I didn't know they also had the independent authority to permit prefunding of a plan contribution . . .

[Andy the Actuary]

Andy -- I hate to intrude during a serious conversation, but aren't "fules" what you call the government's agents holding to a position contrary to your client's position? I didn't know they also had the independent authority to permit prefunding of a plan contribution . . .

The client is effectively making contributions greater than the minimum required and adding to the credit balance. Then, as available, the client would apply the credit balance in a future year to reduce the minimum. Now, deductibility is another issue.