Failure to make discretionary profit sharing contribution for non HCE'

[Guest tcunagin]

A client with a discretionary profit sharing plan failed to make the full contribution for non-HCE's on time. What are the consequences of this other than corporate tax issues? What if anything other than making the contribution must be done?

[Dave Baker]

But the contributions for the HCEs were made on time?

(How did that happen -- are these segregated investment accounts?)

[Guest rhp]

It seems to me that the actual contribution made by the deadline [30 days after the deadline for filing the employer's tax return--1.415-6(b)(7)] must be allocated according to the plan provisions. If that allocation fails 410b or 401a4, you have a qualification failure [unless there is time under 1.401a4-11g to amend]. Correction would need to be made under EPCRS, probably CAP.

[Dave Baker]

tcunagin said:

The HCE have their own investment accounts, several of them. The non-HCE's have their money in a separate pooled account. The client was instructed to make a deposit, and a transfer from two of the HCE's accounts into the pooled account. The transfer occurred and the client deducted the transfer from the total deposit that should have been made, shorting the amount to be deposited!