Discussion:Simple IRA Schedule C Contribution Dates
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Gmacdon167 (talk|edits) said: | 24 February 2007 |
| I have a schedule C filer (single member LLC) establishing a SIMPLE IRA. My question is (and I have yet to find real guidance) is that the owner of the business has until the tax filing deadline (plus extensions) to make the business matching contributions as well as his/her individual deferal, correct? I know for certain that he/she has until deadline stated above to make the matching contributions of the employees as well as his/hers, but what about his/her (the business owner) elective deferral? My software says until the dates I have stated but I'm getting some conflicting information. I know that his/her deferral is based upon earnings net of expenses but obviously those are not determined until the tax return is filed. Am I missing something, or is the advice of the financial advisor simply wrong in that he/she must be making the deferral on an ongoing basis throughout the year? Thanks for any input. | |
Mtmckeecpa (talk|edits) said: | 24 February 2007 |
| G,
My understanding, coming from PPC, is the owner's elective deferral must be deposited no later that 30 days after the end of the tax year since their income is deemed earned as of the last day of the year. The 30 day rule to remit elective deferrals applies to both employees of the Sch C owner and the owner. So, the owner can make elective deferrals during the year. The match is due by the due date, including extensions, of the return. | |
Death&Taxes (talk|edits) said: | 24 February 2007 |
| I agree with your answer, but it is so odd that the one person 401K has until the tax deadline to make both the 401K portion and the profit sharing portion. | |
| 24 February 2007 | |
| We definitely need more guidance here. The research I've seen indicates that SIMPLE contributions for the self employed are under the same rules as SEPs & 401(k)s - extended due date (but any employee contributions are within 30 days of the end of the month withheld). This makes sense as well in that many self employed's do not know what their maximum contribution can be until the tax return is complete. | |
Death&Taxes (talk|edits) said: | 24 February 2007 |
| Found it. Read Riley's comment to Discussion: Solo 401K Deadlines but there is no computation to do of the employee deferral, only the employer contribution of 3%. | |
Mtmckeecpa (talk|edits) said: | 24 February 2007 |
| My info came from PPC Deskbook for Self Employed, I don't think I can copy here due to PPC's copyright .
Jim S: What research have you seen? | |
| 25 February 2007 | |
| I agree with Mtmckeecpa. A SIMPLE is required to have all elective deferrals deposited with the trustee by Jan 30. Sec. 408(p)(5)(A). | |
| February 25, 2007 | |
| Yep, SIMPLE rules are clear, deferrals 30 days after month end prior, and match by due date. | |
Gmacdon167 (talk|edits) said: | 25 February 2007 |
| So, in summary, the business owners elective deferal for him/her must be made by Jan 30, but the matching contribution can be made by the tax filing deadline plus extensions, correct?
And if by some chance he/she makes excess contributions due to income limitations after the "true" schedule C income is determined, then he/she is OK provided that he/she has not made contributionse in excess of total deferrals and matching allowable. Right? Thanks to all for input on this thread. Obviously the financial advisors (including the preparer in this instance) do not have the necessary understanding of how all of this works as it is a very complicated area with little guidance. Lacerte says that it's OK for everything to be funded by the filing (plus exensions). They seem to be a bit confused as well. Oh, how I love the code... | |
