Guest RBlaine Posted March 17, 2009 Posted March 17, 2009 Single owner plan. Zero 2008 Schedule C. Large past compensation causes $140k 2008 minimum required contribution. I know that the MRC can be made without excise tax, but I can't remember what the max contribution can be made without Excise tax. I think the client is confused because he wants to make the 2008 maximum contribution as calculated by PPA. I'm not sure of the benefit of making a larger than needed non-deductible contribution.
Mike Preston Posted March 17, 2009 Posted March 17, 2009 The excise tax for contributions in excess of the maximum deductible amount was eliminated in 4972 for all db plans that are not multiemployer. If the potential reversion excise taxes don't disuade your client from contributing then perhaps the confusion that exists over whether the amount contributed would ever be deductible at all might.
Calavera Posted March 17, 2009 Posted March 17, 2009 The excise tax for contributions in excess of the maximum deductible amount was eliminated in 4972 for all db plans that are not multiemployer. Mike, Can you elaborate? Does it mean that if the maximum deductible contribution calculated by an actuary is $100,000, and client contributed $150,000, he can deduct $100,000 and not pay the excise tax on $50,000? Will he be able to carry forward this non-deducted $50,000 and deduct it next year?
Mike Preston Posted March 17, 2009 Posted March 17, 2009 Yes. Confusion (I hope the answer is yes, but no regs under 404, to date.
Calavera Posted March 18, 2009 Posted March 18, 2009 Wow, I totally missed this one. Just curious, was it always there, or was it added recently?
Mike Preston Posted March 19, 2009 Posted March 19, 2009 Depends on your definition of recently. PPA 2006, I think.
Guest osmundo Posted April 5, 2009 Posted April 5, 2009 The excise tax for contributions in excess of the maximum deductible amount was eliminated in 4972 for all db plans that are not multiemployer. If the potential reversion excise taxes don't disuade your client from contributing then perhaps the confusion that exists over whether the amount contributed would ever be deductible at all might. IRS has publicly stated that 4972©(7) did not eliminate the excise tax on contributions in excess of the maximum deductible contribution
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