Safe Harbor Contribution for 2012 being made in 2014

[katieinny]

We're in the midst of helping an Employer make a correction to his Safe Harbor Plan for 2012 (he failed to make the required 3% Safe Harbor Contribution that year). He's making the corrective contribution this year. Will he be able to deduct the contribution this year?

[BG5150]

I would think so. But they also count against the 2014 415 limits.

[katieinny]

Thanks for your reply. That's what I think, too, based on what little I can find on the subject.

[Tom Poje]

I don't think they count against the 2014 415 limits. It is a corrective contribution for a missed contribution.
for example, lets say Bob made 20,000 and was missed his top heavy in 2012. he quit and has no comp in 2014. if you deposit a make up contribution in 2014 his 415 limit is 0, hence he can't get what he is owed???

At the ASPPA 2010 Q and A (page 4) the IRS response was

An employer had a safe harbor election for the plan year 2008. The plan
and company both operate on a calendar year. The plan is a trustee
directed, balance forward plan. The required 3% contribution was, say,
$15,000. Employer does not go on extension; employer puts the $15,000
into the plan in September of 2009. The contribution is not deductible for
2008 (they'll deduct it in 2009). However, under Section 415, it is not an
annual addition for 2008, since it was not contributed within 30 days of the
tax deadline. However, it is SUPPOSED to go in for 2008 and be allocated
for 2008. Is there a failure to provide the safe harbor contribution for 2008?
If so, how to correct? (Note, this could also be an issue anytime a QNEC
needed to pass ADP or ACP testing is deposited more than 30 days after
the tax return due date but within the 12 month correction period under IRC
401(k).) What if the deposit is not made until after 12/31/09 - that is, more
than year after the plan year end to which it applies?

Contributions made after the Section 415 timing date of 30 days after the tax return due date are
considered to be annual additions for the following year. However, if consider the contribution a
self-correction under EPCRS, it is permissible to relate this back to the earlier year. If the
contribution is made after 12/31, you are clearly under EPCRS. [One of the exceptions to the
415 timing rule is an erroneous failure to allocate. See Treas. Reg. 1.415©-1(b)(6)(ii)(A).
EPCRS clearly treats post-415-period deposits that relate back to a prior plan year as an annual
addition for the year to which it is meant to be paid, but EPCRS applies only after the 12/31/09
deadline. Therefore, there is a lack of guidance for the period between 30 days after the tax
return due date and the end of the 12-month regulatory correction period.]

so I guess in the IRS wisdom, is you are going to be late, just don't correct the problem until 1 year after the fact, just to be on the safe side so you can correct under the EPCRS guidelines.

Nuts! Nuts! and more nuts!

[John Feldt ERPA CPC QPA]

But it does count against the current deduction limit, not against the 2012 deduction limit.