Question: SIMPLE and Profit Sharing, off-calendar fiscal year

[Sue B]

Our client terminated their SIMPLE plan effective 12/31/17, and started a profit sharing plan on 1/1/18. They would like to make a contribution this week to the profit sharing plan for 2018, and they've already funded their 2017 SIMPLE.

Their fiscal year is 3/1 through 2/28. Are they able to deduct both the 2017 SIMPLE contributions and the 2018 profit sharing contribution on their 3/1/17 - 2/28/18 tax filings? They are two distinct plan years, but would be deducted in the same tax year.

Thanks for any insights -

[Bird]

Without looking anything up, I think that is fine.  I think the only requirement is that the plans themselves don't overlap.

[ETA Consulting LLC]

What is the plan year of the profit sharing plan?  What compensation is being used for determining the profit sharing allocation for the plan?

 

[Bird]

2 hours ago, ETA Consulting LLC said:

What is the plan year of the profit sharing plan? 

I assumed calendar year since it was started Jan 1 but that is a good question!

[Sue B]

Calendar year profit sharing plan, yes. And calendar year pay.