Change in timing of deduction

[Earl]

What restrictions (where would I find something...) exist on changing the timing of the deductions?

The plan currently deducts contributions for the plan year ending in the fiscal year (12/31/05 deducted on the 7/31/06 return).

How can you switch to fiscal year in the plan year? (12/31/06 is also deducted on 7/31/06 return)?

Or are you stuck with original timing for life of plan?

Thanks for any help.

[JAY21]

It is a change in accounting method that requires IRS approval. I don't know the reference offhand on where you would find the procedure for such a submission.

[david rigby]

See IRS Reg. 1.404(a)-14©. Sorry, have not checked to see if there is more recent guidance.

[Kirk Maldonado]

© Use of plan in determining deductible limit for employer's taxable year. Although the deductible limit applies for an employer's taxable year, the deductible limit is determined on the basis of a plan year. If the employer's taxable year coincides with the plan year, the deductible limit for the taxable year is the deductible limit for the plan year that coincides with that year. If the employer's taxable year does not coincide with the plan year, the deductible limit under section 404(a)(1)(A)(i), (ii), or (iii) for a given taxable year of the employer is one of the following alternatives:

(1) The deductible limit determined for the plan year commencing within the taxable year.

(2) The deductible limit determined for the plan year ending within the taxable year, or

(3) A weighted average of alternatives (1) and (2). Such an average may be based, for example, upon the number of months of each plan year falling within the taxable year.

The employer must use the same alternative for each taxable year unless consent to change is obtained from the Commissioner under section 446(e).

Treas. Reg. Section 1.404(a)-14©.