What is the statute of limitations for correcting safe harbor contributions?

[katieinny]

An employer thought he could apply the plan's 2 year waiting period for PS contributions to safe harbor contributions. Several years went by before the waiting period error was discovered. The ER is willing to go back some number of years, but we're wondering if a statute of limitations might apply. Documentation to determine when, who, how much, etc. probably isn't available going back more than 3 years.

[QDROphile]

A disqualified plan remains disqualified. The statute of limitations may be relevent to the years for determining the penalties and loss of deductions, but not ending the disqauified status of the plan. The employer is trying to be too clever. Bite the bullet and correct. Not keeping records correctly will appropriately increase the pain.

[Guest Sieve]

There are tax consequences, too, in addition to the qualified plan issues, if the contribution was deducted but the contributins not yet made.

In that case, an amended corporate return must be filed with the deduction removed and appropriate taxes, penalties and interest paid. The deduction then is taken when the contribution is made). The statute of limitations for IRS audit of a corporate return is, I believe, 3 years--no statute for fraud.

[Kevin C]

Rev. Proc. 2008-50, Section 6.02 says a failure isn't corrected unless all taxable years, whether or not closed, are corrected.

[katieinny]

Kevin: Thanks -- I think that's what we'll have to go with.