Advanced Contribution

[Pension RC]

I have a one-man DB plan whose plan sponsor, during 2011, inadvertently contributed $24,970 over the maximum deductible for 2011. Can this be considered an advance contribution for 2012? If so, would the 2011 date be put on the 2012 SB?

Any help would be appreciated!

[david rigby]

If the valdate is not the first day of the PY, your Q is answered in Reg. 1.430(g)-1(d)(2)

http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=ed50d185a6429202524ec5215ff8a967&rgn=div8&view=text&node=26:5.0.1.1.1.0.3.306&idno=26

[Pension RC]

Thanks very much for this reference. I see that, for a plan with a valuation date other that the first day of the plan year, the assets are excluded from the actuarial value of assets. This plan's valuation date is the first day of the plan year. My question is if it can be listed on the SB as a 2012 contribution and, if so, would the 2011 date be listed?

[david rigby]

A 2011 contribution cannot be put on the 2012 SB.

Was it deducted in 2011? If so, it is a 2011 contribution for both minimum and maximum. If the contribution was more than the deductible amount, see IRC 4972.

The actuary should already be very familiar with these issues.

The "excess" seems rather unusual. Might be reasonable for the actuary to double-check all calculations.

[My 2 cents]

It is my understanding of the rules that, while an amount contributed in 2012 may possibly be counted as a contribution for 2011, it is not permissible to treat an amount contributed in 2011 as a contribution for minimum funding purposes for 2012. I don't think there is such a thing as an advance contribution for minimum funding purposes. For deduction purposes, if the 2011 contribution was made during the sponsor's fiscal year ending in 2012 it may be possible to deduct it for the fiscal year ending in 2012, but if both the plan year and the fiscal year coincide then it is unlikely that recognition of the contribution can be put off into the following fiscal year.

Does the plan contain language specifying that if a contribution is determined to not be deductible, it can be returned to the employer? Perhaps that is a way out. If the overage is small enough, it can be done on the enrolled actuary's say-so. If the timing is right, the amount in question would appear to fall within that limit.