Safe Harbor Correction

[pixmax]

Client has not funded their Safe Harbor Contribution for 5 years. They however took a tax deduction for the contribution each year. We've calculated the amounts due with earnings and will put them through the Voluntary Correction Program but now I am worried about 415. Since they already took the deduction do I need to add all 5 years of Safe Harbor Contributions to 2012 415 limits? Any other concerns I should be worried about?

[movedon]

I believe since the contributions are corrective contributions, they count as annual additions for the years the contributions apply to (not the current year).

[Lou S.]

Any other concerns I should be worried about?

You mean beyond 5 years of phantom tax deductions?

If you are taking them through EPCRS the Plan should be fine assuming the IRS is happy with your correction methods. But they will probably need to file amended tax returns for the company for each of the last 5 years where they took deductions for contributins not made.