Deductible Contribution?

[austin3515]

3/31 Fiscal year end with a 12/31 plan year end.

Client has lots of extra income for the 3/31/2015 plan year and is looking for lots of deductions. What they want to do is max out heir 12/31/2014 contributions, and then contribute/deduct the 2015 maximum in the first quarter of 2015.

I know that one of the requirements for deducting contributions made AFTER the end of the year is that it must be allocated as of a date within the fiscal year. Is the same true for contributions made/deductible before the end of the year?

Safe Harbor 3%, funded each pay-period. I don't think anyone would have a problem deducting this on the 3/31/2015 return.

Full profit sharing. There are 3 other employees. The client essentially wants to fund 100% of the projected 12/31/2015 contributions in the first quarter. There are NO Allocation conditions.

Any way to make that work?

[david rigby]

you have inconsistencies in your dates.

[austin3515]

I just read through it again and I don't think I did. Short version:

Deposit 100% of 12/31/2014 contributions on 1/31/2015

Deposit 100% of PROJECTED 12/31/2015 contributions on 3/25/2015.

BOTH are deducted on the 3/31/2015 corporate return.

Does NOT exceed the max deductible 25% limit.

[rcline46]

balance forward plans probably works, daily val not so much cuz you need a slush fund/person to allocate it to.

[austin3515]

So you think if they deposit that "projected" amount to the forfeiture account they could deduct it? It doesn't seem right. Even if it was a to a pooled account it doesn't seem right.

[Mike Preston]

Too busy to talk long, but it also has to be allocated as of a date within the fiscal year.

[mbozek]

I thought there is an exception that allowed a deduction if the contribution was allocated by the date the tax return had to be filed by the employer with extensions but it has been years Since I looked at this issue.

[Mike Preston]

mbozek, never heard such a thing.