Not Sure If Anything Can Be Done Here

Sole Proprietor with a Solo 401(k) plan was with a brokerage firm that was bought by another brokerage firm. Apparently everything was very automatic in transferring investments etc. However, the sole proprietor had an automatic withdrawal of salary deferrals of $2,000 per month. When the new brokerage took over, the automatic $2,000 salary deferrals did not happen. It was always so automatic that the sole proprietor took a deduction for $24,000 for the 2024 year. Later, it was determined that none of the $24,000 went into the sole proprietor's account for 2024.

Does:

1. The sole proprietor just pound sand, suck it up, have his return amended and hand over the income tax, penalties and interest?

2. The sole proprietor have any possibility to deposit $24,000 now and keep the $24,000 deduction for the 2024 year?

Thanks.

If the 401(k) election is recorded in writing to authorize the 24,000, then you simply have a late 401k deposit issue.  

Not even late. For an owner with earned income, they have until their tax return is finalized to deposit their deferrals. For a sole prop that can be as late as 4/15, or even later on extension.

I would have no problem saying that the establishment of an auto-$2k/month withdrawal constitues an election to defer $24k for the year. So just get the remaining money in by 4/15 and call it a day.

The OP was about a 2024 tax return.

Whoops. Missed that part. Then I agree with Bri, it's still a deferral election, it's merely late.

For tax deduction purposes, contributions to the Sole Proprietor account must be made by 10-15 assuming an extension was filed for the personal taxes.  That goes for both employee and employer contributions.  He cannot deduct anything for 2024 unless other money was timely deposited.