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If you failed to follow the SIMPLE IRA plan terms when making employer contributions and the other eligibility requirements of SCP are satisfied, you might be able to use SCP to correct the mistake. Correction programs available: Self-Correction Program (SCP): If it isn't feasible to determine what the actual investment results would have been, you may use a reasonable rate of interest, such as the Department of Labor's Voluntary Fiduciary Correction Program Online Calculator. The corrective contribution is increased for the earnings that the employer contribution would've earned, determined from the date you should've made the contribution until the date you actually made it. Make an employer contribution for each eligible employee who didn't receive a contribution for the year.
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How to fix the mistake: Corrective action: Determine whether terminated employees covered under the plan received an employer contribution for the year of termination. Review employee payroll information to determine if any employee terminated employment during the year. A SIMPLE IRA plan can't require an employee to be employed on any specific day, such as the last day of the year, to receive matching or nonelective contributions.
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Make corrective contributions to place affected employees in the position they would have been in if no mistake was made.Įstablish administrative procedures to ensure that you make an employer contribution for all eligible employees whether or not they terminated employment during the year.Īn employer must make either matching or nonelective contributions to all eligible employees. Review employee payroll data to determine if eligible employees terminated during the year and if they were eligible to receive a contribution. 8) Employer contributions weren't given to terminated eligible employees.