IRS clarifies meaning of plan “contribution” for tax deduction purposes

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Abstract: When is an employer contribution to a retirement plan truly a contribution eligible for a tax deduction under ERISA Section 404(a)? Although this might seem like a rhetorical question, it was deemed worthy enough to warrant a ruling by the U.S. Supreme Court. The IRS also addressed the matter in a chief counsel memorandum (CCM). This article discusses how the issue can arise when a plan sponsor does something more complicated than simply transfer corporate funds from its own bank account to that of the retirement plan trust in a straightforward manner. A short sidebar covers several examples from the CCM. Don E. Williams Co. v. Commissioner, 429 U.S. 569 (1977); IRS CCM 201935011