Plan year different than employer fiscal year
Can the Solo 401k plan year be different than the employer fiscal year?
Yes, but note the following:
- The plan documents will typically list the plan year as the same as the employer fiscal year
- You provided your employer fiscal year on your initial Solo 401k application
- If the plan year is different from the fiscal year, you must pay careful attention to the deadline for making contributions
Employee contributions deadline
The deadline for depositing employee salary deferrals into the plan is relatively straightforward.
Employer contributions deadline
For employer profit sharing contributions, there are different rules depending on the purpose of the deadline. 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 15th, 2016, or September 15th with extension. Without extension, ABC Company must deposit its contributions to the plan by March 15th, 2016, in order to claim the deduction on its 2015 return. With extension, ABC Company can deposit by September 15th.
Deadlines and extensions to establish and contribute
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 extension).
For our given example, the ABC Company files the extension for their 2015 company tax return to September 15th, 2016. They would need to deposit the profit sharing contribution by October 15th, 2016, which is 30 days after the September 15th, in order for it to be treated as a 2015 annual addition.