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Pension Contributions & Lower 2017 Taxes
Did you know that you can deduct pension contributions made by September 15, 2018 from your 2017 taxes? In most years that helps with managing cash flows, but this year it could have major tax consequences. With the corporate tax rate decreasing for most companies from 35% in 2017 to 21% in 2018, deducting pension contributions from 2017 taxes could save you serious money on your tax bill.
This recent article from the Wall Street Journal describes how large U.S. companies are driving hundreds of millions of dollars through this loophole. You probably don’t have that much to contribute, but you can still take advantage of the same loophole as the big guys and save yourself some money in the process.
How Can I Take Advantage of This?
To take advantage of this, your contributions will need to satisfy the general deductibility requirements for expenses, for pension contributions, and the minimum funding rules.
This combination of requirements and rules is difficult to navigate, but in general, a deduction should be available to the extent the contribution:
- is made no later than September 15, 2018
- is otherwise deductible under the income tax provisions of Chapter 1 of the Code
- is designated as a contribution for the 2017 plan year on Schedule SB of the plan’s 2017 Form 5500, and
- does not cause the plan to be more than 150-percent funded, measured in a very specific way provided under the Code.
Reach out and let us help you take advantage of this tax windfall.
Kurtis Thompson can be reached at firstname.lastname@example.org or by phone at (860) 531-4956
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