Missed Mandatory Contribution

[DTH]

A 457(b) plan requires all employees to make a mandatory contribution of 7.5% of compensation. The employer didn't take the mandatory contribution from a new hire's pay beginning 6/2016. The plan document does have language that the employer can make corrective contributions to the plan.

Since employer contributions are added together with employee contributions towards the 457(b) limit, would this also apply to a corrective employer contribution?  

[Carol V. Calhoun]

Employer contributions are indeed added to employee contributions.  The question is whether the employer contributions in this instance would be treated as 2016 contributions or 2017 contributions.  The section 415 regulations call for treating required back contributions (e.g., pursuant to a back pay settlement) as relating to the year in which they should have been made, not the year in which they were made.  By analogy, you could argue that the contributions here should be treated as 2016 contributions.

The problem, of course, is that a) it's probably uneconomic to get a ruling on this, and b) getting a ruling on anything these days is becoming nigh on impossible.  So the client would have to recognize that there is some risk.