contribution deduction - off calendar fiscal client

[pmacduff]

I know this is the most basic of questions but I have been struggling today:

I have a non-calender Employer fiscal year that ends 09/30. The profit sharing plan is a calendar year plan.

For the plan year ending 12/31/2013, when does the Employer deduct the profit share contribution he makes for 2013 and when is it due to the Trust?

I remember way back when learning the basics and there was something on the off calendar fiscal clients about the "fiscal year ending within the plan year" or the "plan year ending within the fiscal year"?!?!?

any help appreciated....

[Lou S.]

The employer has 3 options -

Plan year ending in fiscal year

Plan year beginning in fiscal year

Pro-ration based on months.

Once election is made (I believe by filing tax return with the deduction) the employer must use same method afterward unless they apply to the IRS for an accounting method change. I'm not a CPA though so you might want to double check with the client's CPA on how they are treating it.

Here is an IRS manual that has some examples starting on page 6

http://www.irs.gov/pub/irs-tege/epche903.pdf

[pmacduff]

Thank you Lou. I was trying to find something like what you attached.

The plan is a 401(k) plan that has been around for some time with only 401(k) and safe harbor non elective contributions. Parents retired, son took over and wanted to make profit share contributions.

For the fiscal year ending 09/30/2012 & plan year ending 12/31/2012 the client went on Corp. extension, determined, deposited and allocated a profit share amount well within all deadlines for Plan and Company.

For the fiscal year ending 09/30/2013 the Corporate return was not extended and was filed by 12/15/2013. I am now working on the Plan for the 2013 calendar year. The client requested profit share examples and he wanted to know the deadline for deposit. Since he already filed the Corporate return (showing only safe harbor deduction, which was already made) can he make a profit share for the plan year 2013 but deduct it on the Corporate return for fiscal ending 09/30/2014? He tells me that this will be the method going forward so it will be consistent, but was not for that first profit share.

[TPApril]

Similar situation as original post, but with years reversed: Plan year ends 9/30/15, Fiscal year ends 12/31/15.

So I'm thinking then they have until 9/15/16 to make the contribution for the 9/30/15 plan year when the company has filed an extension on their taxes?