Amended Schedule B/SB

[Guest EBoomer]

We have a frozen DB plan and we are trying to shift excess contributions from one year to a later year. Does any know of any guidance out there that would indicate whether an amended Schedule B/SB to Form 5500 can be filed to shift contributions from an earlier year to a later year?

[Andy the Actuary]

So, essentially contributions were "misreported" on the wrong year. Sounds correctable. HOWEVER:

As I've blogged previously, the IRS has pronounced that contributions may not be deducted in a year preceding the year they are claimed on the SB. So, while it might be allowable to amend the Schedule SB, it might jeopardize the deduction.

[Guest EBoomer]

They weren't misreported, per se. We filed an amended Schedule B in an attempt to split a contribution previously allocated to one year so that it was allocated to two years. The amendment was done because we could not use the credit from the earlier year because the AFTAP for the prior plan year was less than 80%.

[Effen]

Are you saying you used a COB/PFB to help satisify a minimum when you really weren't allowed to because the prior years funded ratio was < 80%? If so, then you now have an unpaid minimum (deficiency) that you would like to clear up by using contributions that were previously designated for the current year to satisify unpaid minimums from the prior year?

Could you be more specific and possibly provide dates?

[Guest EBoomer]

We designated an amount for 2007, which created a credit that we couldn't use in 2008 because the plan was less than 80% funded for the prior year. Question is whether an amended Schedule B/SB could be filed to shift a portion of the contribution made for 2007 so that it can be allocated to 2008. I am looking for authority that says that we can or we can't.

[Guest Quagmire]

We designated an amount for 2007, which created a credit that we couldn't use in 2008 because the plan was less than 80% funded for the prior year. Question is whether an amended Schedule B/SB could be filed to shift a portion of the contribution made for 2007 so that it can be allocated to 2008. I am looking for authority that says that we can or we can't.

There is no authority that says you can or you can't, but you're inviting an audit if you do at this late stage. Also you'd have to carefully think through the impact on subsequent valuations.

Regarding aligning contribution reporting on SB with tax deductions: as much as they might like to, the IRS can't legally revoke a Revenue Ruling with unofficial verbal positions (in my humble non-lawyer's opinion). Having said that, one of the conditions of the RR was evidence tying the contribution to the tax deduction if they are treated as being in different years (such as Board minutes), and "finding" such evidence now would be suspicious at the least. So refiling the B and SB could well endanger the tax deduction, if one was taken. And, finally, while the IRS can't revoke a RR with unofficial verbal statements, they can still disallow a deduction and place the burden of an appeal or litigation on the taxpayer.