Discretionary Match missed

[imchipbrown]

Client has a fiscal year of 7/1/11 - 6/30/12. Allocation of discretionary match is based on deferrals for the calendar year ending in the fiscal year. Plan year is calendar. For the 2011 Plan Year, a match of $10,000 is reported on 2011 Form 5500, allocated on benefit statements as of 12/31/11 and deducted on 1120 for YE 6/30/12.

It is discovered that the matching contribution check was never written. The only participants were three owners.

So, the dedection looks bad. If the 1120 is amended, can the company still fund the 2011 contribution? Must it?

[ESOP Guy]

They can fund the 2011 contribution. The part you need to watch is 415. It has been a few years since I last had this happen. If I recall correctly (and I am rather sure I am recalling this correctly) these will be annual additons in the year of funding and not 2011. You will want to review the 415 regulations carefully. What can make this really hard then is if one of the people doesn't have any comp in the year of funding then 100% of comp 415 limit is zero. That is what I remember was the problem the last time I saw this. It wasn't just 3 people but a company of 40 some odd people and a few had quit so we couldn't give them their match because of the 415 limit.

The must is a harder question in my mind. I have opinions on this but can't point to any rule to back my opinion.