KevinO

IRS Pub 560 (2017) p.4 states "Owner/employees: 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." Table 1, footnote 4 states that some plans that are subject to Dept of Labor rules may have an earlier contribution deadline, but says that self-employed 401k plans are not subject to the DOL rules. Table 1 also says the deadline for employer contributions is the employer’s tax return filing deadline, including extensions. So, the deadline for contributing elective deferrals and employer contributions to a self-employed 401k is the tax return filing deadline, including extensions.

Thank you for that information. In addition to the Gray Book cited above, I found a publication from the 2016 ASPPA Annual Conference that has a lengthier discussion of this issue. It also states that the contribution can be deducted in one year and be used to satisfy the MRC in a different year. 2016 ASPPA Annual Conference - DB Plan contibution can be deductible in one year and satisfy minimum funding in a different year.pdf

Facts: Sole proprietor (SP) uses cash basis accounting and calendar year tax year. 2017 Compensation (i.e., Schedule C net income minus deductible SE tax) is $100,000. 2017 Minimum Required DB contribution is $150,000. 2017 DB contribution deadline is 9-15-2018. Timeline: 4-10-2018 SP makes DB contribution of $80,000. 4-15-2018 SP files 2017 tax return claiming $80,000 DB contribution. 6-1-2018 SP makes DB contribution of $70,000, which he’ll deduct on 2018 return. Question: Can the $70,000 DB contribution on 6-1-2018 be deducted on his 2018 tax return (assuming he has at least $70,000 of Compensation in 2018), but be used to satisfy his 2017 Minimum Required Contribution? Thank you in advance for your input.

Thank you all for your replies. I'm surprised to learn that the law may not permit a self employed person to carryover to future years required minimum contributions to a DB Plan to the extent they exceed earned income even though it permits corporations to do so.

Self employed person with no employees has a 401k and a DB Plan. Sched C income minus 1/2 SE tax is $120k in 2017. Required minimum DB plan contribution is $200k for 2017. If the only retirement plan contribution he makes for 2017 is the $200k contribution to DB Plan, I understand he can deduct only $120k of it in 2017, and will have a carryover of $80k deduction, which he can deduct in future year(s) if he has sufficient compensation in future. Is he allowed to make elective deferral and catch up contributions to 401k plan in the amount of $24k for 2017? Is he allowed to deduction the $24k 401k contribution and $96k of the DB plan contribution in 2017, and carryover to future year(s) the undeducted $104k of the DB Plan contribution? Or is he just not allowed to make a 401k elective deferral and catch up contribution in 2017 because the DB Plan contribution used up all of his compensation? The question is: which plan contribution uses up compensation first, the 401k or the DB Plan? Is there a rule about this somewhere? Thanks.