Contribution date

[retbenser]

Dumb question

On the SB -- what is the contribution date (line 18)?

(a) Date contribution is reflected on the asset statement?

(b) Post-marked date of check?

© Receipt date of check?

(d) Other

Thanks.

[Hojo]

(a)

[My 2 cents]

I seem to recall that it could be acceptable to consider a contribution timely made if the sponsor had taken all actions necessary to give up control over the funds on or before the due date.

Would you complete a deficient Schedule SB if the sponsor mailed a check by certified mail this coming Saturday (September 14th) that was received on the 16th or 17th? Or submitted an after-hours wire transfer on Friday (that would go through on the 16th)?

Granted, if there would be no adverse consequences in doing so, reflecting contributions as of the dates shown on the asset statement would certainly not trigger any difficult questions upon audit.

[Effen]

(d) Other. It is the date which the funds leave the control of the Sponsor.

[david rigby]

Agree with Effen. I've heard this described as the "mailbox rule."

[Guest steve3317]

...(d) Other. It is the date which the funds leave the control of the Sponsor. ...

in the event of audit what would you use to justify this opinion?

[pkfountain]

_{we are in the midst this week a discussion with our actuary regarding timely deposit for a db plan. Client provided investment advisor a check (in his hands) on Friday 9/13. Advisor mailed the check to the investment house by fedex standard overnight. Well Fedex screwed up and did not deliver the package with the check until 9/17. Investment statement shows contribution received, traded and settled on 9/17. We have copy of Fedex receipt showing pickup and delivery. Is there any documentation/reference that you can provide which supports the fedex receipt of pick/delivery is adequate proof of deposit for Item 19 on Schedule SB?}

_Thanks,

[Guest steve3317]

google 2006 Gray book question #4

[Hojo]

Can someone post a response? Because googling it just gives lots of results about a 4th 50 Shades of Gray book and my work doesn't like those links very much.....

[Andy the Actuary]

QUESTION 4

Funding: Reporting of Contributions on Schedule B
Company ABC sponsors a calendar year defined benefit plan. On September 13, 2005, the
plan sponsor mailed a check to the plan trustee for the final required contribution for the 2004
plan year. The trustee received the contribution several days after the check was mailed and
the trustee statement shows the cash contribution to the plan with a date of September 16,
2005.

On the Schedule B, should the actuary report the date of the contribution as September 13,
2005 or must the contribution appear on the following year’s schedule B with a date of
September 16, 2005?

RESPONSE

While the actual date of a contribution can vary depending on the facts and circumstances of
the situation, in general, the date of contribution is the date the contribution is made by the plan
sponsor, and not the date the contribution is received by the trustee. Thus, in the above
example, the date of contribution should be reported on the Schedule B as September 13, 2005.

[Andy the Actuary]

Please note that IRS Gray Book Responses indicate only the way the IRS individuals responding were thinking and is not bona fide guidance that you may be successful relying upon (e.g., in tax court).

[My 2 cents]

As may be inferred from my earlier post, it seems to me that using the date received by the fund/trustee is the easiest (and probably safest) approach, but that would not be the way to go if dealing with a situation with severe adverse consequences and there is sufficient proof that the sponsor sent the check or wire transfer on a timely basis. In light of the Gray Book response, it seems clear that showing the payment as having been made on September 13th would be the way to go, even if all of the other contributions shown on the Schedule SB are being reported as of the dates received.

[Andy the Actuary]

It all made sense until you were suggesting to use two different methods for determining the Schedule SB contribution reporting dates. I'd be consistent and always use the check date. This is especially true if there is ever an audit and you tried to argue the 9/13 date as check date being acceptable.

[My 2 cents]

In the event of an audit, even if one showed check dates for all contributions, a challenge to the date of the final payment could be expected. I don't think there are any requirements for dating contributions that require that all be determined using the same method for any given plan year. The audit challenge would not involve the dates of the other contributions (especially if they were all received by the quarterly due dates, or, alternatively, it is indicated that not all were timely with an attachment and with the discounting suitably adjusted to use the penalty discount rate for the day or two they were late), just the one that makes the difference between meeting the minimum contribution and not meeting it, and the proof would be there to show that it was sent on a timely basis (with good old 2006 Gray Book Question 4 in reserve). In other words, however you report the other contribution dates, it all comes down to the acceptability of recognizing that last payment (which will, inevitably, differ from what the financial statement ultimately shows). If it is a matter of concern, however, even if on all the other Schedule SBs one uses the receipt date, then move all of the dates for this Schedule SB to check date for consistency. And, however handled, be ready to defend the September 13th date.

[pkfountain]

Much thanks for all of the quick responses - the actuary is revising the Schedule SB to "include" the deposit in question on 9/13. He liked the reference we provided to the 2006 Gray Book, in addition to a pile of other references we found relating to this topic. This was the last of our 2012 5500s and Sch SBs to be filed.