Salary deferrals deposited after close of plan year

[lp1965]

I have a 401k plan with a 12/31/15 year end, where the owner did not defer in 2015. He has just now (July of 2016) decided that he should have done so. His CPA is asking me if they can amend his 2015 W-2 to show the deferral and deposit it now. My immediate reaction is "NO". Has anyone else had a client in this situation? I would appreciate any and all input! Thanks.

[401king]

From what I recall, he must have had the written election on/by 12/31/2015. Cannot elect to defer after-the-fact. If he had a written election and mistakenly did not withhold then that would be a different story.

[Bird]

Has anyone else had a client in this situation?

Yes.

But the answer to the CPA's Q is "no."

[lp1965]

Bird, while I like 401King's answer better , I had a feeling that the answer was no. Do you have any backup information (citations, etc.) that I could provide to the CPA?? Thanks.

[Bill Presson]

Pretty sure 401King said the same thing. A salary deferral election must be made prior to earning the compensation.

That's likely in the plan document.

[Tom Poje]

starting with the regs
1.401(k)-1(a)(6)(iii)
Timing of self-employed individual’s cash or deferred election. For purposes of paragraph (a)(3)(iv) of this section, a partner’s compensation is deemed currently available on the last day of the partnership taxable year and a sole proprietor’s compensation is deemed currently available on the last day of the individual’s taxable year. Accordingly, a self-employed individual may not make a cash or deferred election with respect to compensation for a partnership or sole proprietorship taxable year after the last day of that year. See §1.401(k)-2(a)(4)(ii) for the rules regarding when these contributions are treated as allocated.
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of course, in the case of a partner, the compensation hasn't necessarily been determined until after the end of the year, but the election itself must be made before the end of the year
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the example used by Corbel is (which sounds almost exactly like your scenario)
What is the timing for a participant to make a deferral election?
A participant must make an election to defer his/her compensation to a 401(k) plan before the compensation is available. Treas. Reg. §1.401(k)-1(a)(3).
Example. Ellen, a shareholder-employee, after the close of the plan year, determines that she could have deferred more to the 401(k) plan. Accordingly, she writes a check to the trustee for an additional $4,000 and asks the trustee to treat is as an elective deferral. The contribution is not an elective deferral because the election was made after the compensation was already available to the participant.
http://www.relius.net/News/TechnicalUpdateDetails.aspx?T=P&1=1&ID=1012

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sorry, that is the best I can provide, if that is not enough I can't help you

[Bill Presson]

Tom, keep in mind that the OP said the owner got a W-2. So it's either a C or S corp and I don't think any of the self employed info would come into play. Right??

[Tom Poje]

could be Bill. I assumed since we are at this late date I didn't even read the part of it being a W-2 - so my bad.

but even if that, I think my comments hold, if a sole proprietor can't defer 'after the fact' why could anyone else.