Plan Aggregation and timing of contributions

[AndyH]

Safe harbor DB plan with 6/30/09 year end fails ratio/percentage coverage test and is intended to be aggregated with a calendar PS/K plan. Together they would pass the Average Benefits Test. The Plan Sponsor has a calendar fiscal year end and files an extension.

As I understand it, the DB plan 7/1/2008-6/30/2009 would be aggregated with PS/K plan year calendar 2009.

By when must profit sharing allocations, which are necessary to pass the Average Benefits Test, be contributed?

If the answer is other than 4/15/10, can someone offer a cite?

[Mike Preston]

I don't think it is 4/15/10 and I don't have a cite.

IIRC, the regs only state that those years are the appropriate ones to aggregate. They don't talk about accrued contributions or how long you have to take into consideration contributions made after the last day of the plan year. Hence, you want to ensure that any contributions made 1/1/10 or later are counted for 2009.

Certainly if the sponsor has a calendar taxable year and goes on extension, a contribution due on the last day that the tax return was extended to would count for 2009, wouldn't it?

[AndyH]

Thanks for the feedback Mike.

The contrary view (as I am sure you realize) would be that there is a failed coverage test for a DB plan until the PS is funded, and we have only the 11-(g) period to correct it. And that expires 4/15/10.

But I suppose that as long as an amendment is not required, the PS allocation is not necessarily an 11-(g) correction, although in this case the PS is funded only because of DB coverage testing failure.

But you've convinced me that there is a valid argument for a due date later than 4/15, as long as a corrective amendment is not required.

[Mike Preston]

To the db plan? I agree. But if you have a strange -11g for the plan year ending 12/31 I think you have the full correction period.

[AndyH]

Right. That makes sense.