ombskid Posted June 5, 2022 Posted June 5, 2022 Sole proprietors with an existing plan can make 2021 401(k) as well as profit sharing contributions up to their extended tax filing date in 2022. Sole proprietors can adopt a new 401(k) plan in 2022 for 2021 (up to extended tax filing date in 2022). Can they make both 401(k) and profit sharing contributions to the new plan in 2022?
Bird Posted June 6, 2022 Posted June 6, 2022 Can't do 401k retroactively. Bill Presson, Luke Bailey and Lou S. 3 Ed Snyder
Bill Presson Posted June 6, 2022 Posted June 6, 2022 @ombskidthey have to make the deferral election by 12/31 of the year for which the election applies. Luke Bailey, Lou S. and CuseFan 3 William C. Presson, ERPA, QPA, QKA bill.presson@gmail.com C 205.994.4070
truphao Posted June 6, 2022 Posted June 6, 2022 what about the situation when the Plan did not get established until 2022 but Employer/Owner made the Resolution to establish the Plan on 12.30.2021 and stated in writing to defer the maximum amount allowable under the law? The Employer in my question is a Sole-Prop with no employees. I have advised against it (to stay on the conservative side) but I am still curious.
Bill Presson Posted June 7, 2022 Posted June 7, 2022 Well, someone gets to make the decision on when the plan was really established. William C. Presson, ERPA, QPA, QKA bill.presson@gmail.com C 205.994.4070
CuseFan Posted June 7, 2022 Posted June 7, 2022 I don't think a resolution is enough - pre-SECURE would you allow a new plan for 2021 with 2021 resolution but 2022 plan adoption date? Also, resolutions can be and do get rescinded all the time before execution of the action items. I do not think a resolution creates a plan and I don't see how you can have a deferral election for a plan that does not yet exist. I would also recommend against. Bird, Lou S. and Bill Presson 3 Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com
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