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Deadlines to Open a Business Retirement Plan, IRS Filing Requirements and Contribution Limits

September 19, 2017

The logic of the tax code is beyond understanding. If you want “proof” just look at the mishmash of deadline dates when the various retirement plans can be opened. All plans have income limitations and some age limitations that are not included in this listing. Note that in some cases there are automatic extensions for businesses formed after the deadline dates shown below. This is an update to a blog posted September 29, 2016.

SIMPLE Plan IRA (Savings Incentive Match Plan for Employees), SIMPLE 401k and Safe Harbor 401k
Deadline to establish plan: October 1 of the fiscal year.
Contribution deadline: Due date including extensions of the tax return for which the deduction is claimed. It is sooner for contributions by participants.
Maximum deduction for 2017: $12,500 plus $3,000 “catch up” amount for taxpayers over age 50. Additionally employer matching contributions can be made that will exceed these limits.
IRS filing requirements: None for SIMPLE. A 401k must file a Form 5500 when assets exceed $250,000.

401k including solo 401k and Roth 401k
Deadline to establish plan: December 31 of the current fiscal year.
Contribution deadline: Due date including extensions of the tax return for which the deduction is claimed. It is sooner for contributions by participants.
Maximum deduction for 2017: $18,000 plus $6,000 “catch up” amount for taxpayers over age 50. Additionally an employer matching contributions can be made that will exceed these limits.
IRS filing requirements: Form 5500 needs to be filed when assets exceed $250,000.

SEP Plan (Simplified Employee Pension)
Deadline to establish plan: Due date including extensions for the tax year for which the deduction will be claimed. With extensions this can be as late as October 15 of the year following the year the deduction is claimed.
Contribution deadline: Due date including extensions of the tax return for which the deduction is claimed.
Maximum deduction for 2017: $54,000. No “catch up” contributions are permitted.
IRS filing requirements: None

IRA and Roth IRA
Deadline to establish plan: Due date (not including extensions) for the tax year for which the deduction will be claimed. This can be as late as April 15 of the year following the tax year.
Contribution deadline: Due date (not including extensions) for the tax year for which the deduction will be claimed.
Maximum deduction for 2017: $5,500 plus $1,000 “catch up” amount for taxpayers over age 50.
IRS filing requirements: None

Keogh (HR-10), money purchase, profit sharing and defined benefit pension plans
Deadline to establish plan: December 31 of the current fiscal year.
Contribution deadline: Due date including extensions of the tax return for which the deduction is claimed.
Maximum deduction for 2017: $54,000 plus $6,000 “catch up” amount for taxpayers over age 50.
IRS filing requirements: All of these plans must file a Form 5500 annually regardless of amount of assets.

As can be seen, there is no consistency and in some cases no logic to the differences in deadlines to establish the plans and to make contributions. However, these plans can provide great tax benefits and defer income tax on substantial income if used in the right situations the right way. To benefit you must be informed. I suggest discussing with your accountant or tax preparer how you might benefit from using the retirement plans listed above.

As to the mishmash – it is what it is and we just need to abide by the deadlines. Someday perhaps Congress will get its act together and simplify nonrevenue generating rules such as indicated here.

Brian Wallace, CPA, partner at Withum assisted in the preparation of this listing.

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