Can DB contribution be deducted in one year and satisfy MRC in a different year?

[KevinO]

Facts:  Sole proprietor (SP) uses cash basis accounting and calendar year tax year.  2017 Compensation (i.e., Schedule C net income minus deductible SE tax) is $100,000.  2017 Minimum Required DB contribution is $150,000.  2017 DB contribution deadline is 9-15-2018. 

Timeline:

4-10-2018      SP makes DB contribution of $80,000.

4-15-2018      SP files 2017 tax return claiming $80,000 DB contribution.

6-1-2018        SP makes DB contribution of $70,000, which he’ll deduct on 2018 return.

Question:

Can the $70,000 DB contribution on 6-1-2018 be deducted on his 2018 tax return (assuming he has at least $70,000 of Compensation in 2018), but be used to satisfy his 2017 Minimum Required Contribution?

Thank you in advance for your input.

[Calavera]

Yes. The method is well known. See also Gray Book 2011-7.

[NJ Mike]

Here is 2011 Gray Book Question 7.

Mike

2011 Gray Book Q & A 7.pdf

[KevinO]

Thank you for that information. In addition to the Gray Book cited above, I found a publication from the 2016 ASPPA Annual Conference that has a lengthier discussion of this issue. It also states that the contribution can be deducted in one year and be used to satisfy the MRC in a different year.

2016 ASPPA Annual Conference - DB Plan contibution can be deductible in one year and satisfy minimum funding in a different year.pdf