Guest David Lipkin Posted December 29, 1998 Share Posted December 29, 1998 We all know that you can deduct NC and 10 year amortizations, because IRC 404 says so. There is one other part of 404, under 404(a)(1)(ii), which talks about spreading deductions out over at least 5 years. Has anyone seen this used in practice? Is this trying to say that you really should not set up a plan at age 64 (if NRA = 65) and take a big deduction right away? Any insights/experiences would be appreciated. Thanks! Link to comment Share on other sites More sharing options...
Lorraine Dorsa Posted December 30, 1998 Share Posted December 30, 1998 There has never been any guidance on this and the IRS has never mentioned it at any conference or seminar I have attended. Most practitioners I know either ignore it since there is no guidance re what it means or, like me, assume that if you use an "or 5" for normal retirement age (such as "65 or 5th anniversary of participation") everyone will be funded over at least 5 years and this provision will be satisfied. If anyone else has any more comforting answer or analysis, I am interested in hearing it. Link to comment Share on other sites More sharing options...
david rigby Posted December 30, 1998 Share Posted December 30, 1998 Lorraine is correct. There are brief mentions of IRC 404(a)(1)(A)(ii) in a few places: 1,404(a)-14(f) 1.404A-2 Announcement 98-1 Rev. Rul. 94-75 Rev. Rul. 82-125 Rev. Rul. 80-267 These cites don't really say any more than the IRC language. A logical interpretation of this is that a plain reading of the statute is your only real guidance. I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now