general question - allowed to contribute for 2017 now & wants corrected w2?

Is this the correct way to handle this situation?  Employee (officer of corporation) wants to make max 401(k) contribution, effective 12/31/2017 now & wants a corrected W2 for 2017 ASAP.  Also wants CPA to not yet file the tax return & update the return so that the 401k contribution amounts will be correct.

Is this a normal request for a person to on April 15 ask for a corrected W2 and for the tax return to be changed?  Thanks for any thoughts.

To be a 2017 contribution, it must come from a 2017 paycheck. Since it is not possible to issue such a check (legitimately) after 12/31/2017, the request cannot be honored.

Thanks for the quick reply.  The person must misunderstand because he is saying that he is authorized by the IRS to make a contribution for 2017 now (and up until October 15, 2018).

I know for an IRA contributions can be made up until April 17 and that for a SEP IRA contributions can be made up to the date of a timely extended filing, but I did not think an employee, even if a shareholder, could after 12/31 want a deferral.  It seems like that would be a hassle to have to correct W2s, as well as hold off on the tax return filing.

If the person is an owner of certain types of businesses who receives a Schedule K-1 rather than a W-2, he or she won't know the amount of income available from which to make deferrals until some time into the next year. In that case, they would have more time to make a contribution. But since you mentioned an amended W-2, that doesn't seem to apply in this case.

Yes, thanks.  This is a shareholder of a corporation (law firm) who receives W2 income.  Thanks for the clarification.

A deferral election can only apply to compensation that is not currently available when the election is made.  See 1.401(k)-1(a)(3)(iii)(A).  When did he make the election to defer for 2017?  If he didn't decide to defer until 2018, it's too late for 2017 deferrals.

5 hours ago, Erica23 said:

Yes, thanks.  This is a shareholder of a corporation (law firm) who receives W2 income.  Thanks for the clarification.

This is so fundamental (Accounting 101).  Where he got his information is the question; any google search would instantly give him the correct answer.  To do what he wants is TAX FRAUD.  He's a lawyer?  Use that phrase with him.

10 minutes ago, Larry Starr said:

This is so fundamental (Accounting 101).  Where he got his information is the question; any google search would instantly give him the correct answer.  To do what he wants is TAX FRAUD.  He's a lawyer?  Use that phrase with him.

I can't answer that question, but it's apparently not an uncommon misconception. I've gotten this question a few times in the last month or two, and at least once or twice last year, from HR contacts on behalf of W-2 participants who are positive they've done exactly this with previous employers/plans.

To the HR folks' credit, they've at least prefaced the question with "I know the answer is no, but let me double-check in case something has changed..."

If he's a shareholder in an S-Corp, only his W-2 counts as plan compensation.  And since he did not have any deferrals taken out of his paychecks in 2017, he's out of luck.

If he's a shareholder in a partnership, why is he getting a W2?  I've seen that, though.  If so, I believe he can defer from his partnership income, if he has any.

15 hours ago, duckthing said:

I've gotten this question a few times in the last month or two, and at least once or twice last year, from HR contacts on behalf of W-2 participants who are positive they've done exactly this with previous employers/plans.

 

Just because they did it, doesn't make it right or legal.

47 minutes ago, BG5150 said:

Just because they did it, doesn't make it right or legal.

Totally agreed, and I told the people I spoke to exactly that. Have not gotten any pushback on it so far, at least.