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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 6474
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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I had a money purchase Keogh account of just one

Customer Question

I had a money purchase Keogh account of just one participant-- set up some 25 years ago. What do you do about making a minimum required contribution to money purchase Keogh if you have no business income over a period of years? You can't take a % of 0. I have been suffering from serious cancer for a number of years and have been unable to generate business since then so have not made contributions.
I put a" freeze letter" in my file some years ago but don't know whether it is valid and the legal/tax implications of that. How long does the freeze last if valid? Must it be done annually? Or is it permanent? (Did not send notification to IRS) Necessary? Consulted w/Fidelity, accountants. Clueless. Different answers. Also called IRS helpline and they were not helpful.
Moved money purchase over to my traditional IRA end of 2015 and now have to fill out 5500EZ (due 10/17) where they ask about minimum contributions made last yr. I put "0" (12b, c, d) which I fear will open up a can of worms since the contribution is required. No place on form to say "no income" or "frozen".
Should I attach letter explaining?"
Desperate.
Submitted: 4 months ago.
Category: Tax
Customer: replied 4 months ago.
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Expert:  Stephen G. replied 4 months ago.

Hello, my name is***** goal is to give you a complete & accurate answer. I am working on your request now & I will respond as soon as possible.

Expert:  Stephen G. replied 4 months ago.

Do you still want a telephone consultation or would you like to continue here?

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Steve G.

Expert:  Stephen G. replied 4 months ago.

I wouldn't be concerned about entering the "zeros" as you have noted above. I presume that your plan was a defined contribution plan (otherwise you would have had a defined benefit plan with annual actuarial requirements). That being said your plan should have had a provision that if there was no income or a loss, there was either no defined contribution required or management could elect to forego the contribution for any year that there was either a loss or no income or no salary or wages or business conducted or some comparable wording. You can't have a minimum contribution requirement for a defined contribution plan where there is nothing to base the contribution on, ie. no wages, etc.

I think that's answers your question.

If you have any follow-up questions, please ask.

Steve G.

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