Timing of Deposits for Partners (Relius article)

[austin3515]

http://www.relius.net/News/TechnicalUpdates.aspx?ID=1010

Just curious if anyone read this article and whether or not they were very concerned about this as it relates to the small partnerships with 2 to 5 partners or so. I get it that PriceWaterhouseCoopers better pay attention to this rule, but it seems like the small guys should be essentially immune from this rule since they are only offending against themselves.

One thing I suppose I could be better about is telling people the contributions are due no later than shortly after the date you file tax returns for the year. I suppose that is the verifiable date on which at the latest you knew the distributive share. I dare say I am one of those who casually referenced the "due date of your business tax returns."

[Bird]

I don't always give full answers to clients. On this one, I've always said "it's best to get it in right after the end of the year, since that's when your income is determined." But the truth is, that for tax purposes, those contributions are due by the due date of the tax return. For DOL/plan asset purposes, the article is saying it's tied to the distribution date of partnership income, which is a little looser than the last day of the year, and sounds reasonable.

(But I'm not sure I want to try to explain that to someone who just wants a simple answer, and will probably continue to advise that they make deposits right after the end of the year.)

[austin3515]

The catch-22 of course is that the partner who would deposit the money on January 5th may as well deposit on December 25th thus avoiding the need for the election.

[Bird]

mmm, I guess, but herding cats and all that, at least Dec 31 is a date to get their attention.