Please check out this good question from our one of our daily My Community Q&A Webinars. Subscribe to our YouTube Channel to get notifications of our Daily FAQs.
Harvard Law Attorney George Blower explains how the deadline for making Solo 401k contributions depend on how your self-employed business is taxed.
The Deadline for Contributing to Your Solo 401(k) – Are You Missing Out?
If you’re self-employed or run your own business, you may be wondering when the deadline is for making contributions to a Solo 401(k) plan. The Solo 401k offers many benefits, including the highest contribution limits for any defined contribution plan available to self-employed individuals.
As long as you set up a plan by 12/31/2023, you will preserve the right to make all types of 2023 Solo 401k contributions up until your self-employed business tax deadline including any timely filed extension.
This means that the Solo 401k contribution deadline depends on the structure of your business:
Sole Proprietorship
If you file taxes as a sole proprietor, your deadline aligns with your personal tax return deadline. For example:
John is a freelance graphic designer who reports his earned self-employment income on Schedule C of his 1040 and opened a Solo 401k account with us by 12/31/2023. To maximize his Solo 401(k) contributions for 2023, John needs to complete all contributions by April 15, 2024 (or October 15, 2024, if he files a timely extension).
S-Corp or Partnership
If your self-employed business was taxed as an S-corp or partnership, the contribution deadline would be earlier – for example:
Mary’s social media consulting business is an S-corp. Her corporate tax return deadline is March 15, 2024 (or September 16, 2024, if she files a timely extension for her business tax return). If Mary sets up a Solo 401k plan by 12/31/2023, Mary must complete 2023 by March 15, 2024 (or September 16, 2024, if she files a timely extension for her business tax return).
C-Corp
Bob’s graphic design business is a C-corp and already has a Solo 401k. His corporate tax return deadline is April 15, 2024 (or October 15, 2024, if he files a timely extension). Bob can make 2023 Solo 401(k) contributions up until April 15, 2024 (or October 15, 2024, if he files a timely extension).
As you can see, it’s essential to know your business structure’s tax return deadline to ensure you fully fund your Solo 401(k) on time. Don’t leave retirement savings on the table by missing the annual cut-off date.
