2011 Contribution was forgotten

[Jim Chad]

We have been looking at this for a while and I am just not sure.

12-31-2011 SHNEC and discretionary non-elective were missed.

I think we have to put in the SHNEC. Does anyone know off the top of your head if this has to be VCP filed?

I think we cannot put in the discretionary non-elective. But here is my problem. All employees received statements showing they would get this contribution.....that it was a receivable.

[Jim Chad]

By the way, yes this is a doctor plan and we go up to the 415 limit every year.

[ETA Consulting LLC]

Your issue is that you missed the 415 funding deadline to have those contributions considered as annual additions for the 2011 year; not to mention deductibility. HOWEVER, there is an exception to that 415 funding deadline when the contribution was missed due to an oversight. My first approach would be to document this in order to ensure the contributions get treated as annual additions for 2011. I would treat deductibilty as a secondary issue; that does need to get addressed.

You "may" submit under VCP (but there may be enough there 'already' to treat the contributions as annual additions for 2011). A submission would merely be added insurance. I would doubt the IRS would allow the deduction for 2011 (but there is nothing to preclude you from asking for it). You may, then, be looking at reducing the contributions for the current year in order to avoid exceeding the deduction limit (assuming your limit is already close to 25% each year).

Good Luck!

[Kevin C]

SCP is available to correct significant operational failures for a limited time period. You should still be within the correction period under Rev. Proc. 2013-12, Section 9.02 to fix the SHNEC. The corrective contribution counts against the 415 limit for the year being corrected (Section 6.02(4)(b)), but the normal deduction rules apply.

I don't know if you would be able to do the same with the 2011 PS contribution. I would start with Rev. Proc. 2013-12 to see if it has anything that helps you.

[BG5150]

Did the company deduct those contributions for the 2011 year? If not, I doubt they'd be able to go back and do the PS for that year.