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Yes, it's "permitted" in the sense that it is not per se illegal; but, yes, it certainly could pose PT issues.

Short answer? Yes. I normally do not take on clients who are unwilling to fix known errors. Can you prepare statements and returns using numbers you know are wrong? Especially when you don't even know why the numbers are bad? I personally don't think so. Do I miss out on some business because clients refuse to correct prior bad work? Yup, but a vast majority of clients would rather get it fixed than just continue with bad data. In order to "patch" differences between return and report, you have to at least know what you are patching and why. If there is an unexplained difference, you need to investigate. That is my opinion, your mileage may vary.

Is anyone interested in finding out why it doesn't reconcile? I'd be concerned about an underlying problem unless it can be proven where the mistake on the 5500 happened. Too many years of reconciling trusts for 401(k)s that never allowed for even a penny's difference. But I do understand that investigation takes time and money. How big is the difference and is it too much or too little?

that was what I was taught when I started in the business years ago, well, that was well before safe harbors. I was taught you included money purchase contribution (a plan subject to minimum funding standards) due but not yet made because it was mandatory, so the logic would seem to be the same for safe harbor, though of course they never amended the regs to say that . (If it was the first year of the plan, for whatever reason the regs say you include the profit sharing as well.(the regs say "however in the first year of the plan, the adjustment should reflect any contribution made after the determination date that are allocated as of a date in the first year. the long winded answer (even longer than some of my sad humor I've posted) is below. it should be remembered that IRS responses to such Q and As do not necessarily reflect an actual Treasury position. .......... Receivable Contribution and Top Heavy Determination? Is a discretionary profit sharing contribution for the prior plan year that is deposited after the end of the prior plan year included in the top heavy determination for the current plan year? Let’s say we have a calendar year plan, effective several years ago. We are determining the plan's top heavy percentage for the 2002 plan year. The determination date is therefore 12/31/01. The employer makes a contribution in February, 2002, which is allocated and deducted as of 12/31/01. There is a question as to whether this contribution is included in the top heavy determination for the 2002 plan year. The question relates to Q&A T-24 of the 416 regulations, which says that if a plan is not subject to 412, then the account balances are not “adjusted” to reflect a contribution made after the determination date. A. The key phrase here is “account balance”. The participants’ account balances, as of (say) 12/31/01, include the profit sharing contribution that is allocated and deducted for the 12/31/01 plan year end. So the guidance regarding “adjustments” does not apply to the receivable profit sharing contribution; it is already part of the participants’ account balances. The question as to what contributions are considered due on the determination date is determined under §1.416-1, Q&A T-24, which says that it “is generally the amount of any contributions actually made after the valuation date but on or before the determination date”. It then goes on to say that any amounts due under §412 are considered due, even if not made by the determination date. One could take the position that this is a exclusive statement; in other words, if a contribution is NOT due under 412 and is made after the determination date, it is not considered 'due'. However, the answer to the question (T-24), “How is the present value of an accrued benefit determined in a defined contribution plan” is answered, “the sum of (a) the account balance as of the most recent valuation date occurring within a 12-month period ending on the determination date, and (b) an adjustment for contributions...” The term, "the account balance" includes contributions credited to the account of a participant, it does NOT mean only the contributions actually made that have been credited. For example, if a 100% vested participant terminated after the determination date but before the contribution was actually made, the distribution would include that contribution, even though it had not yet been made to the plan. This is because the account balance, as of the last day of the plan year, includes the contribution. So, when the regulation addresses adjusting the account balance for contributions made after the determination date, we must start with the account balance, and then apply the adjustments. Since the account balance includes the receivable profit sharing contribution, the adjustment does not refer to the receivable. The reference to §412 in §1.416-1 is with regard to a waived funding deficiency that is not considered part a the participants' “account balance”, as the term is defined. Q&A T-24 refers to a DC plan with a waived funding deficiency that is being amortized. Such a plan must maintain an “adjusted account balance” (reflecting the amount of the contribution that has not been deposited) which must be maintained until the actual account balance increases to the point where it equals the “adjusted account balance”. It is to this (unadjusted) account balance that the (waived) contribution must be added, since the amortized contribution only becomes a part of the actual account balance as it is paid to the plan. The requirement therefore has the effect of determining top heavy status as though the contribution required under 412 had actually been made. In other words, the “account balance” would not include the waived minimum funding contribution, so an adjustment is required. IRS response: We accept this analysis. 2002 Annual Conference IRS Questions and Answers #49

Open with 2015 5500 closing balance and put the difference in 'Other Income'