Profit Sharing Plan Contribution Deadline

Contribution Type Statutory Funding Deadline Salary Deferrals Generally within 7 business days from date withheld from employees paychecks.

Profit sharing plan contribution deadline. Although it is called a profit-sharing plan you dont actually have to make a business profit for the year in order to make a contribution except for yourself if you are self-employed as discussed under Self-employed individual later. For example a calendar year business unlike a fiscal year business had to establish a retirement plan by December 31 of the tax year for which the employer wanted to make a contribution and receive a deduction. There is a new Solo 401k contribution deadline for 2020.

Depending on the entity type of the Plan Sponsor that date can vary. The maximum contribution for a profit-sharing plan is the lesser of 25 of compensation or 57000 in 2020 whichever is less. If for some reason you miss the December 31 deadline you can still open the Solo 401 k by your tax filing deadline and take advantage of the Profit Sharing contribution.

Safe harbor matching and nonelective contributions. This limit fluctuates over time with inflation. In any given year a business can elect to make a profit sharing contribution to its employees.

Non-safe harbor matching and nonelective contributions. A defined contribution plan can be either a profit-sharing plan or a money purchase pension plan. Examples of changes requiring plan amendments may include accelerating plan eligibility for new hires or changing the manner in which a profit sharing contribution is allocated among participants.

If an employer passed this December 31 deadline the employer could no longer establish a plan for that business year. Some plans require a shorter period. Profit sharing contribution is made on December 15 2019 for the 2019 plan year.

Further as long as you get the plan open by then you can wait on the actual contributions until your tax filing deadline. Thus there is no longer several months between the deadline for adopting and funding the Defined Benefit Plan. Previously you would have had until December 31 2020 to establish your Solo 401k plan which would allow you until April 15 2021 the Tax Filing Deadline to make contributions.