Timing of profit sharing contribution deduction for a not-for-profit employer

[Guest Lisa Stifel]

How does the deduction rules of 404(a)(6) apply to a not-for-profit employer who sponsors a profit sharing plan? My client, decided to make a contribution to it's profit sharing plan for the PYE 6/30/04. Normally, if this were a for-profit employer the contribution would have to be made by 4/15/05 in order to be deductible for that year. However, there is a possibility the funds will not be available to the employer to fund the contribution by this deadline. Given the fact that the employer is not paying taxes because of their non-profit status (and not deducting this contribution), how does the deduction rules of 404(a)(6) effect this situation?

I have searched the ERISA Outline book and other materials but can't find much guidance. Your help would be appreciated.

[Effen]

I may not have the exact answer, but this should help.

I encountered a similar situation a few years ago and the attorney explained that since it is a non-profit and it was a profit sharing plan, deductions and funding requirements are none issues. Therefore the 8 1/2 month rule doesn't really apply.

They looked to the filing of the 990 which is due 5.5 months after the year end, but can be extended for 5 (?) additional months. Therefore, the "due date" for allocation purposes is 10.5 months after the plan year end.

So they could make a contribution on 5/15/05 and allocate it to the 6/30/04 plan year.

I may be off on my months, but you get the idea.

[E as in ERISA]

Do they file a 990-T (an income tax return)? If so, some look to the filing deadline for that return as the relevant deadline for various purposes (the 15th day of the 11th month, if fully extended).

How are you getting 4/15 as the deadline for a for-profit?

[Guest Lisa Stifel]

Thanks for your responses. Yes, they do file a 990 and it has been extended to 5/15/05 (10.5 months or 15th day of 11th month after the PYE). Sorry for the confusion on the 4/15 deadline - that is my extended due date for the Form 5500.

[E as in ERISA]

Do they file a 990-T along with that? An income tax return in addition to the information return?

[Guest Lisa Stifel]

No, just the 990.