The Real Deadline for Making 2024 Solo 401k Contributions
Last Updated 12/7/2024
Many self-employed individuals are confused about the deadline for making Solo 401k contributions for the 2024 tax year. Your CPA may be telling you that you need to make all employee and employer contributions by December 31, 2023. But this is actually not the case for Solo 401k plans.
In a recent My Community Q&A webinar regarding the 2024 Solo 401k Setup Deadline, we explained that the deadline for Solo 401k contributions is different than the deadline for full-time employer plan that one might have at a “day job”:
- For regular employer 401k plans, employee contributions must be made by December 31st of that tax year.
- But for Solo 401k plans, the deadline is later. Employee contributions can be made up until the self-employed business tax filing deadline including any timely filed extension (e.g., for a sole proprietor this would be April 15 of the following year, or October 15 if a timely extension is filed).
- This later deadline makes sense because self-employed individuals often don’t know their final income until after the year ends.
- IRS Publication 560 confirms that both employee and employer Solo 401k contributions can be made up until the tax return due date, including extensions.
If you don’t already have a solo 401k, all you need to do is sign up with us by the end of the year to preserve the right to make 2024 Solo 401k contributions any time up until your self-employed business tax return deadline including any timely filed extension in 2025:
- You only need to establish the Solo 401k plan by December 31, 2024 to make 2024 contributions in 2025. This simply involves signing the adoption agreement.
- You do not need to obtain an EIN, open any bank accounts, or make contributions by December 31, 2024.
- Employee and employer contributions for 2024 can be made after year-end, up until the tax return due date with extensions.
- IRS Publication 560 clearly states the extended deadlines for Solo 401k contributions.
The Bottom Line
So while your CPA may think there is a December 31st deadline to make Solo 401k contributions, you actually have until your tax return due date next year to make 2024 Solo 401k contributions. Just be sure to open an account by December 31, 2024!
