Solo 401k Contribution Deadlines

The rules for solo 401k deadlines differ depending on your filing status and the type of contribution.

The Secure Act of 2019 added a rule for establishing a plan up to and including extensions for the previous taxable year.  However, there are two critical issues that you need to understand regarding employee contributions.  The first is understanding the difference between the plan's effective date, the election of employee deferrals, and the actual employee deferral contributions date.

Employee deferrals (contributions) must be elected before the end of the year. However, you can make the actual contribution later (depending on how you file your taxes determines this deadline). Even if you establish the plan retroactively, there is no way to elect employee deferrals retroactively. In the case of a sole proprietor/schedule C filer, the election documents an employee deferral.  There is no official documentation or form to do this, so take note of the election and keep it in your company files.  It will likely only be requested in the event of an IRS audit, similar to keeping company receipts.

The image below shows the text from IRS publication 560, which states, "The employee deferrals must be elected by the end of the tax year and then can be made by the tax return filing deadline, including extensions." Another rule for s-corporation owners complicates this deadline because of the required filing deadline of the form W2.

 

The second issue is specific to S-corporations and employee deferrals due to the W2 filing deadline.  The employee solo 401k contribution will show on your w2 and therefore needs to be elected by 12/31 and completed by January 31st of the following taxable year.

The profit-sharing contributions for schedule C filers and S-corporations can be made up to the tax filing deadline, including extensions.