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MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2342
Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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This question of for a tax exempt credit union. What is the

Resolved Question:

This question of for a tax exempt credit union. What is the deadline for depositing their profit sharing portion of the 401k plan. For most businesses I believe that is the due date of their tax return plus extensions. What about a tax exempt institution like this. By the way the credit union made that depost for 2007 on April 16, 2008. I'm thinking that was a late deposit. Please advise.
Submitted: 8 years ago.
Category: Tax
Expert:  MequonCPA replied 8 years ago.

DearCustomer-

 

A deduction in a prior year is allowed for contributions for to profit sharing plans if the contribution is made prior to the due date of the return including extensions.

 

"89 Rev. Rul. 55-310, 1955-1 C.B. 45. Both accrual method and cash method taxpayers have a grace period to make contributions for the taxable year. A payment is deemed made in the preceding taxable year if it is "on account of" such preceding year and it is made before the due date (including extensions) for filing the employer's federal income tax return for the year. Operationally, two requirements must be met for a payment to be treated as being on account of the preceding year: (1) the plan's terms must allow the payment to be treated as made for the preceding year; and (2) the employer eithe must designate the payment, in writing, to th plan administrator or trustee, as applying towar the previous year or must actually deduct the payment on it tax return for the previous year. Such designation, once made, is irrevocable."

Customer: replied 8 years ago.
Steve, as I mentioned this is a tax exempt credit union so they really do not have a due date or concerned about the tax deduction. Therefore I guess the due date does not apply? Is there any committment to the participants for timely deposit of the profit sharing portion or does that just have to do with the employer's deduction?
Expert:  MequonCPA replied 8 years ago.

DearCustomer-

 

The organization is still required to file a 990 which is due on May 15th without an extension, or August 15th with extension.

Customer: replied 8 years ago.
Okay, then their depost on April 16 would be within that time period. Thanks for the assistance, it was very helpful.
Expert:  MequonCPA replied 8 years ago.
Glad I could help.
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