Deduction Issue - Employer Contributions

[WesleyT]

I have a corporation that files taxes on a calendar year basis. 2008 taxes were filed timely without an extension. No deduction for employer contributions was taken. They now want to make a contribution for 2008.

2 questions:

1. Is the 30 day allowance to allocation contributions for prior year based on 3/15 if no extension was filed? Or based on 9/15?

2. If they did decide to allocate a contribution in 2008 and deduct it for 2009, could they also deduct the 2009 contribution on an accrual basis in 2009? This would result in the deduction for 2 plan years in 1 tax year. The deduction wording appears somewhat ambiguous, but it seems the alternative would be to perpetually deduct employer contributions on a cash basis.

Thanks for any help!

Wes

[jkdoll2]

The employer contribution is due when the tax return is due (either 3/15 if no extension or 9/15 if extension filed).

The employer contribution for 2008 that was funded in 2009 can be deducted in 2009 year along with the contribution for 2009 as long as the total combined do not go over the 25% limit of the total compensation for the 2009 year.

[Jim Chad]

WesleyT

Also watch out for 415 limits. I think that they have to be contributed by 30 days after 3-15-09 to count in 2008 415 limits. If someone has no comp in 2009 and you can't allocate anything to them, I think.

[WesleyT]

Unfortunately, my reason for wanting to allocate the contribution in 2008 was that the owners are going to max out in 2009. So, if all contributions are going to be annual additions for 2009, it will all have to go to NHCEs anyway.

It sounds like the easiest thing will be to allocate in 2009 and avoid the possible terminated employee issue. Thanks for your help!