Nonprofit Contribution

[nancy]

Is there a deadline for a nonprofit to make an employer contribution?

[Peter Gulia]

If you're asking about a nonelective contribution, one of the several practical points - rules about how long after a relevant year an employer may pay the contribution while still getting a tax deduction attributable to that year - might not matter much if the tax-exempt organization lacks income against which the deduction might be useful.

I've had experiences working with charitable organizations to write plans and summary plan descriptions that conditioned a nonelective contribution on the employer's collections of a specified set of revenues.

Setting up provisions of that kind calls for careful lawyering, which often must consider business and legal questions beyond those customary for most employee-benefits practitioners.

 

[jpod]

Assuming the nonprofit is also tax-exempt, and putting aside potential UBTI calculation issues, isn't there a time limit under 415 for counting an annual addition for the current limitation year?  Also, does the plan by any chance state a deadline?  

[Kevin C]

There is also a timing rule for when the contribution must be deposited to be considered an annual addition for the year.

 

Quote

1.415(c)-1(b)(6)(i) (B) Date of employer contributions. For purposes of this paragraph (b), employer contributions are not treated as credited to a participant's account for a particular limitation year unless the contributions are actually made to the plan no later than 30 days after the end of the period described in section 404(a)(6) applicable to the taxable year with or within which the particular limitation year ends. If, however, contributions are made by an employer exempt from Federal income tax (including a governmental employer), the contributions must be made to the plan no later than the 15th day of the tenth calendar month following the end of the calendar year or fiscal year (as applicable, depending on the basis on which the employer keeps its books) with or within which the particular limitation year ends. If contributions are made to a plan after the end of the period during which contributions can be made and treated as credited to a participant's account for a particular limitation year, allocations attributable to those contributions are treated as credited to the participant's account for the limitation year during which those contributions are made.

Underline added since I can't change colors.

[Bill Presson]

Long thread on this a few months ago:

 

[Peter Gulia]

And as everyone suggests, if the contribution obligation might have already accrued, read carefully the plan's governing documents to consider its express and implied provisions; and read carefully the summary plan description to evaluate whether the plan's administrator met its fiduciary responsibility in communicating the plan's provisions.