Safe Harbor 401K - Senior Moment

[thepensionmaven]

One person PC, owner wants to set up 401(k) by 9/30.

Question is, does this have to be partially funded at set-up( $1,000 or whatever minimum the brokerage firm needs) and the balance by 12/31?

I would assume he does 't have to make the full contribution at this time.

[Jim Chad]

Is his business a fiscal year 9-30?

[Mike Preston]

There are reasons why a 12/31 fiscal taxpayer might want a 401(k) by 9/30, so the question is still valid even if it is a 12/31 fiscal.

And the answer to both parts of the OP is "no".

The first "no" means that there is no requirement to fund a plan by the end of the first plan year to have a valid plan. The second "no" means that there is no deadline of 12/31 associated with a 9/30 plan year.

However, deferrals can only be taken out of payroll and once taken out of payroll must find their way to the plan in short order. So that may be the functional equivalent of a 12/31 deadline (ok, maybe ~1/7/17) if the goal is to reduce 2016 taxable income.

[thepensionmaven]

PC is on calendar year.

Owner only.

I guess this is really no question at all.

I was thinking more in terms of a safe harbor plan, as this would be a new plan for 2016.

If the broker needs a token amount to open up the account, I assume that would suffice as long as the client made his total $24K by 12/31

[Mike Preston]

A one-person PC that wants to set up a safe-harbor plan needs an advisor who knows more than he/she does.

[thepensionmaven]

He just wanted to set up prior to end of year for 2016 and just funded his 2015 DB.

Obviously did not have to be "safe harbor"

[Mike Preston]

Then post #3 gives you the answers.