What happens if I cannot make the minimum required contribution to my Cash Balance Plan?

The latest you can make the minimum required contribution to a Cash Balance Plan (or Defined Benefit Plan) is 8.5 months after the close of the plan year (September 15 for calendar year plans). If you are unable to make the minimum required contribution, you will owe excise taxes equal to 10% of the unpaid minimum required contribution amount. Use Form 5330 to report the excise tax amount.

Note: you will still need to make the minimum required contribution in the future even if you are unable to make it in time. The minimum required contribution continues to grow with interest until you make it.

One way to come up with additional funds prior to September 15 is to take a loan from your existing 401(k) Plan or Cash Balance Plan. A few of our clients have done this and it helped them meet the minimum for the year as well as avoid paying the excise taxes.

Please contact Jeremy Palm if you have questions about your Cash Balance Plan.

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