Question 4L on Schedule H

[justatester]

We have a client that has two participants who had distributions paid in 2009 with incorrect vesting calculations.

The correct vesting was calculated and paid to these participants in 2010.

The client wants to know if they now need to answer question 4L on the Schedule H ‘Has the plan failed to provide any benefit when due under the plan’ as a ‘Yes.’

Any help would be greatly appreciated!

[My 2 cents]

I would be very surprised if that is the sort of situation intended to be addressed by that question. I always thought of that question as involving cash flow problems.

By the way, not paying a lump sum because of funding issues (whether attributable to Section 436 or high-25 issues) is NOT a failure to pay plan benefits when due. As the plan incorporates the requirements of Section 436 and the high-25 restriction, a restricted payment is not due under the terms of the plan.