S corp db contribution from personal

[SSRRS]

Hi,

Does anyone see anything wrong with a DB plan sponsored by an s corp, the owner needs cash to make the contribution  so he will contribute from his personal brokerage account (and not from the corp account).? Thank you

[Peter Gulia]

The shareholder might want his lawyer’s, accountant’s, and actuary’s collaborative advice about whether it makes sense for the shareholder to loan money to the corporation, or contribute new capital to the corporation.

If either transaction makes sense, the corporation then might have money to pay a contribution to the pension plan.

This is not advice to anyone.

[Bri]

I would approach it as, that should be a company check for the deposit.  Where the company got the money from, I don't mind hearing/seeing/speaking no evil as to how.  So that I can at least apply a standard of reasonableness

[CuseFan]

No can do - as @Bri states - company contribution/check, as that is where any deduction occurs and where an IRS auditor would be looking to substantiate. Beyond that, plan sponsor and his accountant can figure out the details to make that happen.

[Jakyasar]

Agree with Bri and Cusefan. Lending money to the corporation for pension purposes is a very common practice. As the sponsor is a corporation, all contributions must come directly from the sponsor and no one else.

[Dougsbpc]

We have had this happen in the past.

Of course it is best to have the shareholder make a loan to the corporation and then have the corporation fund the plan. However, some years ago the same thing happened and the CPA recorded it as a shareholder loan on the books of the corporation and did not seem to be very concerned that the loan proceeds came from the 100% shareholder.

[Jakyasar]

Interesting as a participant directly depositing into the plan.

[CuseFan]

20 hours ago, Dougsbpc said:

CPA recorded it as a shareholder loan on the books of the corporation and did not seem to be very concerned

With apologies to any CPAs on the forum, some have no issues with taking transactional shortcuts if you end up in the same place. Maybe the new overworked and underpaid IRS will say "meh, ok, no harm no foul, these aren't the droids we're looking for, go about your business."