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Required contribution exceeds sch c income - deduction issues for db plans

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A hypothetical (might be reality soon) situation - never had to deal with it, believe it or not:

2020 required contribution is 150k and sch c income is 0.

Client has the money to make the deposit and will do so by 9/15.

A few questions:

  • Will this amount be part of 2021 deduction?
  • For 2021, say another 150k required contribution and another loss on the schedule c. What happens, carries over 300k as non deductible for future years and can deduct in future years?
  • 2021 has a good schedule c income and the 404o limit is over 300k. Can he deduct for 2020 and 2021 contributions as the total will be less than 404o limit?
  • Anything else i am not asking?


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  • 2 weeks later...

I think you have it generally correct, except that a 10% penalty applies to the excess unless there is an election to not take into account such excess contributions for the tax (don't know why somebody deemed this necessary).  The election is addressed in 4972(c)(7). 

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