Contribution deduction to a qualified plan.

[sjpalmeriii]

We have a qualified profit sharing plan which is solely company funded. Contributions are discretionary. Two companies have adopted the plan agreement. When the plan was initially adopted the companies were a controlled group but are currently NOT a controlled group. If necessary we can make the companies a controlled group.

Can one company still contribute to the plan that benefits ALL participating employees in the plan (who are from both companies) and the company who makes the contribution take a tax deduction for the COMPLETE contribution? i.e. we have basically been picking and choosing which company needs the tax deduction and making the contribution from that company. Can we keep doing this? Our TPA says no.

[K2retire]

Does the document allow for different contribution rates to the employees of the different companies?

[sjpalmeriii]

Does the document allow for different contribution rates to the employees of the different companies?

No it doesn't.

[mbozek]

I am not an accountant who prepares tax returns but I thought that the deduction for contributions made by one employer to cover the contributions of another employer who participates in the plan can only be made if they are members of a controlled group filing a consolidated tax return. Off the top of my head 404a allows deductions based on compensation of employees of the employer.

[ETA Consulting LLC]

Not to change the subject, but if the two companies are not longer related and the plan is written to a prototype, then you may want to visit whether there is reliance on the opinion letter.

Good Luck!