401(k) for Self Employed

[Guest moe]

What is the deadline for self employed plan participants to deposit elective deferrals?

[rocknrolls2]

moe,

If the plan covers only self-employed participants because there are no common law employees, the plan is exempt from ERISA, as a plan without employees. See 29 CFR Section 2510.3-3(B). In that situation, the DOL limit does not apply. However, the IRS has construed the exclusive benefit rule to include fiduciary responsibility. Therefore, while the DOL deadline would not apply, it would be preferable to remit the contributions ASAP to avoid imposition of the exclusive benefit rule by the IRS.

[jaemmons]

Generally, in order to take a tax deduction for the elective deferral, the deferral and any other contribution made to the plan on their behalf, must be deposited by the due date for filing their individual federal tax return, including extensions. Each self-employed individual takes a personal deduction on their respective IRS Form 1040, from the K-1 to Form 1065, in the amount of ALL contributions made to a qualified retirement plan on their behalf, including deferrals. Because of this, the timing of when these contributions must be deposited, is on an individual self-employed person basis. The deferral deposits for the common-law employees is based must follow suit with the prescribed DOL "15-day funding rule".

Someone can correct me if I am wrong, but the "15-day funding rule" does not apply in the case of any self-employed individual, but only to common-law employees, since contributions to the self employed persons are individually deductible.

[Guest lforesz]

If the self-employed individual (i.e. a partner) takes the deduction on their personal k-1s, then do these contributions count towards the 15% limit on the partnership's total deductible contribution including the staff? HELP!