How to make Solo 401k contributions by the extended tax return deadline

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

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About George Blower

I have the privilege of educating our clients about our products and services so that they can make informed and confident decisions about their financial future. Prior to joining My Solo 401k Financial, I served as the general counsel for a subsidiary of a Fortune 500 financial services company. Learn more about George Blower and My Solo 401k Financial >>