Beginning of Year Valuation

[Dougsbpc]

Is it possible for a new company to adopt a DB with a beginning of year valuation?

For example, suppose an S-corp is formed 1/1/2006. No compensation exists for the prior year, but suppose we wait until 12/31/06 and use 2006 compensation. I know an end of year could be done the first year and then switch to beg of year, but could you start with beg of year?

If it is possible to use first year salary for a new company and beg of year DB, could the plan year be different from the company year? For example, suppose an s-corp is formed 10/1/2005 with a 12/31/05 year end. Could the employer adopt a db with a plan year 10/1/05-9/30/06? My understanding is if a beg of year valuation is done, the deduction could be taken on the 12/31/05 return. In this case the only participant will be the 100% owner and he will absoultely have more than $210K in salary every year. the contribution would have to be funded by 9/15/2006.

Thanks much.

[FAPInJax]

I do not know why you couldn't use a BOY valuation (using assumed compensation - actually end of the year compensation for the first year).

The first being true, the plan year versus corporate year would also work. I believe all the documentation would have to be executed prior to the end of the corporate year if a deduction were to be claimed for 2005.