administrator fees for defined benefit plan

Technical topics regarding tax preparation.
#1
lucyko  
Posts:
933
Joined:
27-Jul-2014 10:19pm
Location:
Orange County,CA
I have a sole proprietor client (Schedule C ) who has established a defined benefit plan . He currently pays the annual third party administrator fees from the Schedule C business . Can he take a deduction on Schedule C for the payment or should the Defined Benefit Plan be paying the fee in which case that would lower the balance in the DBP .
 

#2
Nilodop  
Posts:
18761
Joined:
21-Apr-2014 9:28am
Location:
Pennsylvania
Yes, he can. Is there some doubt on that which I am overlooking?
 

#3
lucyko  
Posts:
933
Joined:
27-Jul-2014 10:19pm
Location:
Orange County,CA
Only that the nature of the expense stems originates from the defined benefit plan and not the activity of the Schedule C .If this is deductible on Schedule C what expense category should it be reported on ?
 

#4
Posts:
6043
Joined:
22-Apr-2014 3:06pm
Location:
WA State
The benefit plan would benefit all employees and the owner. Just because there may not be any other employees doesn't change the nature of the deduction. It's a business level retirement plan either way.
~Captcook
 

#5
sjrcpa  
Posts:
6477
Joined:
23-Apr-2014 5:27pm
Location:
Maryland
Legal and Professional Fees.
 

#6
Nilodop  
Posts:
18761
Joined:
21-Apr-2014 9:28am
Location:
Pennsylvania
It goes w/o saying, but I'll say it, that the economics change (favorably) by employer's paying the fees and deducting them, while the plan balance compounds annually on a tax-deferred basis.
 

#7
Spock  
Posts:
69
Joined:
13-Jul-2021 4:31pm
Location:
United States
Some of the expenses may also qualify for the credit for Small Employer Pension Plan start-up costs.
 


Return to Taxation



Who is online

Users browsing this forum: actionbsns, DaleGMac14, FiguredBasis, Google [Bot], Google Adsense [Bot], GRobCPA, IDunnoItDepends, JoJoCPA, JR1, ManVsTax, SALYstrikesagain, Seaside CPA and 194 guests