Due Date of Self Employed SIMPLE IRA Ee Contributions

[austin3515]

I know, I know, 30 days after the end of the plan year-end. But isn't that just based on the DOL's plan asset rules? For deduction purposes, shouldn't they have until they file their 1040 or business tax return?

[Lou S.]

I think this is one of the issues with Simple-IRA for self-employed where the deposit deadline may actually be before they "know" their earned income. I could be wrong but I thought the IRS said the 30 day rule applied and you had to meet it even for self employed, which is different that their rule on a qualified 401(k) where only the election needs to be made before 12/31.

[Belgarath]

Yes. See IRC 404(m).

[austin3515]

That's just employer contributions. 408p5a(I) is the problem.

HAs anyone ever heard of a "late" deposit being an issue for a self employed individual in this situation? I have to imagine it happens ALL THE TIME that people deposit in April when they file their taxes...

[Belgarath]

Hey Austin - I still think 404(m) covers the timing for deductibility, assuming the plan qualifies as a "Simple" plan even though the contributions are made after the 30 day period.

What I mean is this: (p)(5) says that employer elective contributions under (2)(a)(i) must be made no later than the 30 days. (2)(a)(i)(I) is still referred to as an elective "employer" contribution. So for deductibility purposes, I still think 404(m) covers it. The alternative, to me, is to take the hard line conservative (and IMHO, ridiculous) position that violating that 30 day requirement would disqualify the SIMPLE.

And no, I've never seen a situation where an unincorporated was given a hard time due to depositing later than the 30 days.

[austin3515]

I like it a lot... It's a good enough story that you could tell it with a very straight face upon audit.

Thanks!