401k accrual

[Unregistered]

I am doing 1120s for year 2005 for a client.

This is my new client. I do have 2004 tax return prepared by someone.

On 2004 return, Accrued retirement (401K) amount, in other liability, is $26,000. Where as on line 17, on first page of 1120S, it is $13,000. I am concluding that $13,000 is matching for 2004. Where as 401k witholding amount ($13,000 per client) is in wages.

What does it mean? This is my first return with 401K involved.
2004 return was filed in 09/05.

Please help.

Thanks!

Client will do matching for 2005 before 09/15/2006 and has 401k withholding of $12,000 for 2005.

[Bees Knees]

On 2004 return, Accrued retirement (401K) amount, in other liability, is $26,000. Where as on line 17, on first page of 1120S, it is $13,000. I am concluding that $13,000 is matching for 2004. Where as 401k witholding amount ($13,000 per client) is in wages.

What does it mean? This is my first return with 401K involved.
2004 return was filed in 09/05.

It means what you concluded. The $26,000 total 401(k) contributions for 2004 are reported on page 1 of the 1120S as $13,000, line 17, employer's portion being listed as a pension plan deduction, and the other $13,000 reflected on line 7 and 8 as part of the deduction for gross wages paid, as it came out of the employee's paycheck. An employer can take a deduction for pension benefits provided to employees as long as the contribution is made by the due date, including extensions for the filing of the tax return. In other words, the employer had until 9/15/2005 to contribute the 2004 401(k) plan contributions.

However...that only applies to the employer's matching portion. The employer is required to deposit elective deferrals into the employee's account no later than the 15th business day of the month following the payday [TTB page 13-5). If they are withheld from employee wages, you can't wait to make the contributions. So this employer obviously is in violation of the rules as the employee elective deferrals were withheld throughout the year through payroll, increasing the 401(k) contribution liability account, but not actually deposited until after the end of the 2004 tax year, which would have meant they were contributed long after 15 days from when the were withheld. Unless all employee elective deferrals for the year were withheld from wages less than 15 days before the end of 2004 and contributed to the employee's account sometime after the end of 2004 but before the 15 days were up.

[Unregistered]

thank you

Thank you for your help