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Plan Year Different from Company Fiscal Year

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2 replies to this topic



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Posted 28 September 1999 - 11:09 PM

Fiscal year is 12/31 and plan year is 6/30. They had both been 6/30 until fiscal year was changed many years ago.

Are there any compelling reasons to change the plan year?

#2 richard


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Posted 29 September 1999 - 01:56 AM

As long as you and they are comfortable about keeping track of which fiscal year the deduction for contributions applies to, there's no reason to change.

And since you and they are already doing this, again there's no reason to change.

However, if they have other retirement plans on a 12/31 year end and you want to aggregate them for discrimination testing purposes, you're already living with a level of complexity that would be alleviated by changing plan years.

#3 Phil L

Phil L

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Posted 13 October 1999 - 06:10 PM

Isn't the employer tax deduction limited to 15% of the fiscal year wages of the participants who benefit during the year? If the company funds a profit sharing contribution on 9/14/98 (its tax filing deadline), for example, and the contribution gets allocated to participants who work 1,000 hours and are employed at 12/31/98, you might have a problem with deductibility. In other words, it would be easy for the employer to have exceeded the deductible limits because the list of employees who are benefiting won't be determined until well after the contribution is made.