Matching contributions

[Guest jim williams]

Can an employer who pays a matching contribution during 2003 deduct this contribution on their 2003 return if it pertains to the 2002 plan year?

The employer decided on making a 2002 matching contribution after they filed their 2002 return without extension.

I know employer contributions are deductible in the year paid, but would compensation earned and deferral contributions made have to pertain to the same tax year?

[Guest qwert]

Contributions made in 2003 are deductible on 2002 taxes if (a) they relate to 2002 and (b) they are made "not later than the time prescribed by law for filing the return for [2002] (including extensions thereof." It sounds like you pass (a) but may fail (b). Unless they filed the return early or they got an extension (but didn't use it), it sounds like the contribution was made after the due date for the return. If that's the case, I don't think it can be deducted for 2002. The Code cite is 404(a)(6).

[Archimage]

qwert, you are correct as far as 2002 is concerned. The question is in regards to 2003 though. I may take a more aggressive stance in my interpretation but I believe that the employer can deduct the contribution on the 2003 return. 404(a)(6) talks about claiming a deduction for contributions made this year in the prior taxable year. That is not the case in this situation. The contributions are not being claimed for a prior taxable year.

[Guest qwert]

Oh, you're right jim. I misread, thinking Archimage wanted to filed an amended 2002 return with the 2003 contribution. The contribution is pretty clearly deductible in 2003.