Per IRS Pub. 560, the deadline to make both employee and employer contributions is your business tax return deadline including any timely filed extension:
SEP IRA Workaround:
Make 2019 Contributions with no Solo 401k plan
- Do you want to make Solo 401k contributions for 2019 but you missed the Solo 401k Deadline by failing to establish the plan by December 31, 2019?
- If you filed a timely extension for your 1040 (by filing Form 4868), you can still make employer contributions to a SEP IRA.
- 2019 Employer contribution limit is 25% of your self-employment compensation not to exceed $56,000
- The deadline is October 15, 2020 if you filed a timely extension
- Work with your tax advisor to report (e.g. on your 1040)
- Future Years: For 2020 and going forward the Solo 401k deadline is aligned with the SEP IRA deadline (per the SECURE Act)
Restate Solo 401k plan to make
Roth & Mega Backdoor Roth Contributions
- Restate Solo 401k plan established before 12/31/2019 to a plan that allows you to make Roth and Voluntary After-Tax Contributions
- If you filed a timely extension, you can make Roth and/or Voluntary After-Tax Contributions on or before your 2019 extended business tax return deadline
- Consider the contribution limits
- Open new sub-accounts for Roth and Voluntary After-tax contributions
- Convert/Rollover the funds after the deadline
Practical Tips – Making Contributions by the Extended Tax Return Deadline
- Don’t wait until the last minute
- Processing times increase during tax filing seasons
- Open separate sub-accounts as needed
- Name and EIN of the Solo 401k
- Spouses or partners
- Pre-Tax, Roth and Voluntary After-tax funds
- Check payable to the solo 401k
- Write “Annual Contribution” on the memo section of the check.
- Post-marked by the applicable deadline date
- If electronic, confirm that institution providing the account will accept electronic transfer from an account with a different name
