Ugly SARSEP Situation

[Margaret CPA in OH]

Hello all and especially to William and the ATX crew, past and present. As I am #18154 (older ATX number), I remember several names and great help.

The situation I have is pretty ugly. The client has a SARSEP and for the several years I have been working with them they have accrued the 3% company contribution and paid it out in January the following year. I am now looking at year end data to prepare the return and see that the contribution for 2006 was neither booked nor paid. Now what?

I don't deal with payroll or deferred compensation or other retirement plans so am not sure where to look for next steps. My fear is that this will invalidate their entire plan. Whatever direction anyone can provide would be greatly appreciated.

Thanks, Margaret

[RoyDaleOne]

IRS VCSEP Rev. Proc. 2002-47 may cover what to do in this situation.

I did not read it in completely.

[Margaret CPA in OH]

IRS VCSEP Rev. Proc. 2002-47 may cover what to do in this situation.

I did not read it in completely.

Thanks so very much! That is exactly what I needed to know. After reading through it, I believe that the client can self correct following the procedure described by making the contribution and adjusting for the lost earnings. That should be fairly easy to determine as each participant has an existing account so the rate should be available.

This will, of course, be a hit to the client's bottom line now but must be done. Thanks again for your help and especially for the incredible turn around time!