Self-Employed Salary deduction

[Guest Gary Tencer]

Clarification: This is a 401(k) elected "salary reduction" of 15% by the self-employed. Not an employer "non elective" contribution!

Self employed elects 15% for 1998(this amount will be less then $10,000). Net income will not be determined until 4/15/99. When is the contribution required to be remitted to the trustee? Do you have a cite for your answer?

[This message has been edited by Gary Tencer (edited 09-11-98).]

[stephen]

I believe the self employed indidual has until he files his personal taxes (with extensions).

[LCARUSI]

I pretty much agree with Stephen.

But there is one exception. If the Plan is subject to minimum funding standards under sec 412 (a money purchase plan), contributions must be made within 8 1/2 months after the end of the Plan Year.

Thus if you have a money purchase plan and the individual is on extension beyond 9/15, the contribution must be made b 9/15. (Not for section 404 purposes, but for 412 purposes.)

[Guest ffarkash]

Yes, I also agree with Stephen. Participant contributions are deemed plan assets and are due in on the earliest date that they reasonably can be segregated from the employer's general assets. In this case, although the employer may also be the employee, the contributions should be made as soon as possible after the amount of the plan contribution is determinable. To be safe, it should be within 15 business days from the end of the month in which the contribution amounts are determinable. (However, in the case of a partnership, I believe this is the date that the partnership files it's return not the individual)

[This message has been edited by ffarkash (edited 09-11-98).]