Timing of sole proprietor elective deferrals

[bzorc]

Must a sole proprietor who has (or is interested in setting up) a "Uni-K" plan have their elective deferrals made by December 31? I seem to remember reading somewhere that the elective deferrals can be made up through the due date of the tax return. Any help would be appreciated!

[Guest rmeigs]

My understanding is that Solo(k) plans are no different than any other 401(k). In brief, employee (in this case the sole proprietor) salary deferral contributions must be made by December 31st. Employer contributions can be made up through the due date of the tax return, plus extensions.

Correct me if I'm wrong on this.

[Guest rmeigs]

As a follow-up, here is a Q&A from the Bisys Individual(k) plan site:

Q. What is the deadline to make an employee salary deferral election?

If you are the owner of an unincorporated business (i.e., sole proprietor or partner), you must generally make a written employee salary deferral election (specifying the amount of your intended employee salary deferral) by no later than the last day of your tax year.

If your business is incorporated, you must generally make a written employee salary deferral election (specifying the amount of your intended employee salary deferral) before the compensation is currently available or paid to you.

Q. What is the deadline for funding my Individual(k) plan?

The deadline for funding the profit sharing portion of your Individual(k) plan is your business tax return due date, including extensions. The deadline for depositing employee salary deferrals depends on whether or not your business is incorporated.

If you are an unincorporated business owner (i.e., a sole proprietor or partner), the deadline for depositing your employee salary deferrals is your business tax return due date, including extensions.

If your business is incorporated, conservatively, the deadline for depositing employee salary deferrals is the earliest date on which the deferrals can be reasonably segregated from your business's general assets, and no later than the 15th business day of the month following the month in which the deferrals are withheld.

[pmacduff]

I want to make sure I follow this...the self-employed person must make their election to defer by December 31st...but the actual deposit of $ can be made up until April 15th plus extensions? Are there any cites about this? I have found many references to the election being made by 12/31, but no references to the actual deposit of deferral $. Any info is appreciated...