B21 Posted March 26, 2014 Report Share Posted March 26, 2014 I have a client who is a sole proprietor & sponsors a Simple IRA. She was unaware that the deadline for her to deposit her 2013 deferral contribution was 1/30/14. She thought she had until her 2013 Schedule C income was determined. If she makes the deposit now can she correct under the IRS VCP? Would an IRS Compliance letter allow my client to take a 2013 deduction for her deferral contributions or can the deduction be taken in the year of correction? Link to comment Share on other sites More sharing options...
masteff Posted March 26, 2014 Report Share Posted March 26, 2014 You might see if you can fall under SCP, see pages 19-21 here: http://www.irs.gov/pub/irs-tege/simple_fixit_guide.pdf I'd weigh other options before doing a full VCP. How much comp does she have? Have you looked at an SEP IRA instead? Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra Link to comment Share on other sites More sharing options...
B21 Posted March 26, 2014 Author Report Share Posted March 26, 2014 I was thinking of a SEP for 2013 as an alternative but wouldn't the Simple plan have to had been terminated prior to 1/1/13? Link to comment Share on other sites More sharing options...
masteff Posted March 27, 2014 Report Share Posted March 27, 2014 http://www.irs.gov/pub/irs-tege/forum10_simple_ira.pdf I'm leaning towards SCP correction of the SIMPLE, but I can't make that determination for you. The correction would be to make the deposit now plus corrective earnings since Jan 30th. Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra Link to comment Share on other sites More sharing options...
Flyboyjohn Posted April 23, 2014 Report Share Posted April 23, 2014 Can anyone point me to a cite for the proposition that the elective deferral of a self-employed individual has to be made by January 30th? Link to comment Share on other sites More sharing options...
ETA Consulting LLC Posted April 24, 2014 Report Share Posted April 24, 2014 IRC Section 408(p)(5)(A). It's a SIMPLE IRA provision that does not consider the possibility that a "sole prop" or "partner" may not know their income for the year in which to base a deferral. Good Luck! CPC, QPA, QKA, TGPC, ERPA Link to comment Share on other sites More sharing options...
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