Money Purchase Plan Contribution Deduction

[eilano]

A client filed its corporate return for the fiscal year ended 8/31/1999. The plan is a money purchase plan and the contribution for the plan year ended 8/31/1999 has already been deposited. The compensation for one of the employees was reported incorrectly and the participant is now due an additional contribution of $1,237.50. It is my understanding that for minimum funding requirements, the client would still be required to make the deposit but for deduction purposes, would the client be able to file an amended corporate return and get the additional deduction for 8/31/1999 or can the client deduct the additional contribution for the fiscal year ended 8/31/2000?

[imchipbrown]

I'd say, you've got 8.5 months to meet minimum funding requirements, and excise tax if you don't make the deadline, so get the additional money in.

As for deductions, I'd say you could amend the return or take the deduction in the current year (subject to any max deduction limits).

Small amount... is amending worth it? Maybe only if deduction will be lost due to 404 limits.

[richard]

I agree with Chip that you've got 8.5 months to make the minimum funding contribution.

However, I'm not sure that I'm in agreement with Chip about the availability of amending the corporate return to deduct the additional contribution.

Case #1 --If the corporate return was due 12/15/99 and they did not go on extension, and now they would like to amend the return to deduct a contribution made after 12/15/99, I don't believe this would be deductible (for FYE 8/99).

Case #2 -- However, if the corporate return was due 12/15/99 and they went on extension to, let's say, 3/15/00, and they would like to amend the return (before 3/15/00) to deduct a contribution made after 12/15/99 and before 3/15/00, I believe this could be done and the contribution would be deductible (for FYE 8/99)

I'm not really sure on either situation (hence, these are my caveated opinions), but I think this is interesting enough to warrant additional input from the readers of this thread. ...