3745 / When are pension plan contributions credited for funding standard account purposes?

For plan years beginning before 2008, the funding standard account is credited with the contributions for the plan year.¹ The employer had a grace period of 8½ months after the plan year ended to make contributions for that plan year.² This is true even with respect to the plan year in which the plan terminates.³

A contribution was not considered timely made when, prior to the expiration of the 8½ months, an employer merely segregated a sum sufficient to fund its plan contributions in an extra checking account in the name of the employer, not in the name of the plan.⁴

The rules governing the time when a contribution is deemed made for the purposes of crediting the funding standard account generally are independent of the rules governing the time when a contribution is deemed made for deduction purposes.⁵ Thus, contributions made for one plan year but carried over to a later tax year for deduction purposes may not be credited to the account as a contribution for the later year.⁶ A contribution made during the grace period on account of the preceding tax year may be made for and credited to the account for the current plan year.⁷ Likewise, a contribution made in and deducted for the current plan year may be credited for the previous year for purposes of the funding rules if made during the grace period.⁸ See Q 3743 for overview information on calculating a plan sponsor’s required minimum contribution for the years from 2007-2021 applying the relief in MAP-21 and HATFA 2014.

1.  IRC § 412(b)(3)(A), prior to amendment by PPA 2006.