Can the plan year be different than the employer fiscal year?
Yes, the plan year can be different from the fiscal year, but you must then pay careful attention to the deadline for making contributions.
The deadline for depositing employee salary deferrals into the plan is relatively straightforward. However, the same cannot be said for the profit sharing contributions.
For profit sharing contributions, there are different rules depending on the purpose of the deadline. In other words, one set of regulations may specify one deadline for compliance purposes, but another set requires a different deadline for deduction purposes.
In order to deduct a contribution for a given year, it must be deposited by the due date (including extensions) of the company tax return.
For example, ABC Company is a calendar year tax filer. Its 2015 company return is due March 15, 2016, but can be extended to September 15th. If ABC Company does not extend the due date of its company return, it must deposit its contributions to the plan no later than March 15, 2016, in order to claim the deduction on its 2015 return. If ABC does extend, the deposit must be made no later than September 15th.
The Annual Additions limit refers to the total amount of contributions that can be allocated to a participant's account for a given limitation year. In most cases, the limitation year is the same as the plan year. In order for a company contribution to be treated as an annual addition for a given year, that contribution must be deposited no later than 30 days following the due date of the company tax return (with extensions).
For example, the ABC Company extends the deadline for the 2015 company tax return to September 15, 2016. The date by which they would need to deposit the profit sharing contribution in order for it to be treated as a 2015 annual addition is October 15, 2016, which is 30 days after the September 15th tax-filing deadline.