Money Purchase Plan- Late Contribution

[Coleboy1]

The contribution for a money purchase plan was made 2 days late. Will the client be subjected to a penalty for being only 2 days late?

[justanotheradmin]

you are going to need to provide more details. 

Late how? 

After the deadline in order to be deductible? Generally tied to the organization business tax return filing deadline?

More than 12 months after the year end so that it creates a possible 415 issue? 

[CuseFan]

45 minutes ago, justanotheradmin said:

Late how? 

Remember that MPPPs are subject to minimum funding due 8 1/2 months after PYE (9/15 for calendar year plans) similar to DBPs. In that manner, I believe you may have a funding deficiency. However, if checks were cut/mailed by the due date but not received/deposited until a couple of days later you may have wiggle room - but if a late electronic transfer then truly late.

[Coleboy1]

The deadline was 9/15. The recordkeeper rejected the contribution file due to the fact that there were some people not on the system but were on the contribution file. The people were added but the recordkeeper's system takes a day or 2 to recognize the newly added people. Hence the contribution could not be made.

[justanotheradmin]

assuming this is via ach, sounds like its late then. 

hindsight is 20/20

the employer should have at least revised and submitted the people they could. and then only a portion would be late

and in future years, they should get people added to the recordkeeper sooner, even if the deposit is going to occur at the 11th hour. no reason to wait to input employee data until the 11th hour.