PS plan allocation/deduction issues

[Jakyasar]

Hi

Takeover plan. First time for 5330.

2 shareholders - both HCE

2018 salaries 200k each thus max 100k deduction limit. Deposited 110k during 2018. Each got 50k allocation and suspense account got 10k (5330 penalty was paid)

2019 salaries 220k each this max 110k deduction limit. Deposited 110k during 2019. CPA informed me 108k was deducted and does not want to amend the return for 2019.

Assume no earnings for 2019, to simplify.

Is the 2019 amount for 5330 penalty 12k? Any other way to reduce?

As the 415(c) limit of 56k is not violated, can any of the excess amount be allocated to the shareholders even if not deductible? I do not think so as not deductible???

Thank you for your comments.

[Bill Presson]

Before doing anything else, they should amend the plan to a 401(k) and start deferring the maximum. That would likely eliminate the deduction issue going forward and give them additional contributions.

[Jakyasar]

Believe me, I am trying but to no avail but the year is still young.

[Jakyasar]

Any takers