- 5 -
Discussion
Section 412(a) requires generally that an employer who
sponsors a qualified retirement plan such as a money purchase
plan must satisfy the minimum funding standard for such plan for
each plan year. In order to meet the minimum funding standard,
the plan must not have an accumulated funding deficiency for the
plan year. See sec. 412(a). To determine whether an accumulated
funding deficiency exists for any year, pension plan costs and
liabilities are compared to employer contributions through the
“funding standard account”. At the end of each plan year, the
employer will have satisfied its minimum funding obligation if
the aggregate charges to the account, determined on a cumulative
basis, do not exceed the aggregate credits. Any excess is an
accumulated funding deficiency.
Section 4971(a) imposes on the employer responsible for
making the required contributions a 10-percent excise tax on any
accumulated funding deficiency, as defined in section 412(a),
existing for any plan year. The imposition of the excise tax
under section 4971(a) is mandatory if there is an accumulated
funding deficiency for any plan year. See D.J. Lee, M.D., Inc.
v. Commissioner, 92 T.C. 291, 300 (1989), affd. 931 F.2d 418 (6th
Cir. 1991).
The parties agree that for the Wenger plan year ending
December 31, 1994, petitioner was required to make contributions
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011