Amended Tax Return

[Guest J Samuelson]

What's the correct procedure regarding the 15% max for a self-employed individual when the tax returns for 97 and 98 are being amended and will result in less earned income? This client (with a 401K plan - deferral, no match, the remainder of the 15% is put in as a profit sharing cont. each year) put in the max for both years. He has three employees beside himself who also received a profit sharing contribution.

Is there a 10% penalty since the money wasn't taken out by 4/15/98 (for 97 tax return) and 4/15/99 (for 98 tax return)? Can we take money out of the other employees' accounts if the new allocation shows less or should it all be taken out of the owner's?

Any assistance or advice on the matter is much appreciated!