Profit Sharing Plan Termination

[Guest Astro]

A plan sponsor with a profit sharing plan wants to retire. He wants to terminate the plan 12/31/07 and make an asset sale to another sole proprietor. He wants to make one last contribution to the plan after all year-end reports are in but before the final 5500 and other tax returns are due. So, the plan will have terminated in 2007 and the final contribution will occur in early 2008 before all tax returns are due.

Can this be done?

[Belgarath]

Yes.

[Bird]

I agree ("yes") but...if you're thinking that the 2007 tax return will be the final tax return, as might be read into your comments, that's incorrect. A return is due for any year that assets exist in the plan, even if it is terminated in 2007.