Expert: Ed McFarland - 1/22/2005

Question
Can you please brief me on the details of accounting for deferred wage/pension payments.  If too involved to respond here, please tell me where I can get the proceedures.
Scenerio: Owner of a SubS. is over 50 years old, is allowed to defer from W-2 and invest $12M into a Simple/IRA.
1. I understand the W-2 & 941 proceedure, (I hope).
2. How is the 1120S handled: Is the gross payroll entered as the "Officer Comp) on line 7 and the pension payments entered as a "pension plan payment" on line 17?  This somehow seems incorrect to me because it seems to be a doubling of the expense?
Thanks for you help.
Ed.

Answer
You can get detailed instructions if you go to http://www.irs.gov/instructions/i1120s/index.html

The SIMPLE IRA isn't a pension plan or a defined benefit plan to use the IRS term. A SIMPLE IRA is a pretax contribution from the W2 wages, it doesn't go on line 17.

Good luck.