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Question 278: We have a PEO in which a client organization is top-heavy. The PEO is on a calendar plan and tax year. The client organization is leaving the PEO and wants to delay making the top-heavy contribution. They have a 9/30 tax year. We want them to make the top-heavy contribution before the 2004 form 5500 is filed, no later than 10/17/2005. They want to wait until 6/15/2006, because this is when their corporate tax return for the 9/30/05 plan year is due. Is 6/15/2005 or 6/15/2006 the correct tax filing to use as a deadline? Also, if the payment is not made until 6/15/2006, would the PEO plan have a qualification issue for the 2004 top-heavy contribution not having been made in a timely manner? |
Answer: Your question raises an important issue for multiple employer plans, particularly those sponsored by PEOs. It demonstrates the importance of carefully addressing participating employer responsibilities, either in the plan document or in an outside contract. |
Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.
The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.
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