Deduction When Plan Year / Tax Year Do Not Coincide

[Guest notapensiongeek]

This is a pretty basic question but we run across so few of these anymore, I always get confused! Please bear with me.

Calendar year 401(k) PSP, client's tax year ends 10/31. Form 5500 is on extension until 10/15/08 for PYE 12/31/2007. Must the client make the ER contribution deposit for PYE 12/31/2007 by 10/15/08 (due date of 5500) or do they have until 1/15/09 to make the deposit?

Any input you have on this would be great.

Thanks!

[Guest Sieve]

Due date of Form 5500 is of no concern. If the py contribution is made by the due date (including extensions) of the tax return for the taxable year in which the py ends, it is deductible in that taxable year. Contribution for plan year ending 12/31/2007 falls within the company's taxable year ending 10/31/08. So, the contribution for py ending 12/31/2007 can be made by the due date for the tax return in which that plan year ends, i.e. by the due date for the tax return for the taxable year ending 10/31/2008. That date is 1/15/2009 (or, if the return due date is extended and part of the extension is used, 7/15/2009).

[Guest notapensiongeek]

Thanks!