Decemfor the 2019 safe harbor non-elective contribution.Ī2: For safe harbor match plans, the deposit deadline depends on how frequently your plan document requires the match to be calculated. In order for company contributions to be treated as an annual addition for a given year, the contribution must be deposited no more than 30 days after the due date of the company tax return (with extensions) for that given year.įAQ: Are there any special deadlines for depositing the company contribution for a safe harbor 401(k) plan?Ī1: The safe harbor non-elective contribution must be deposited no later than the last day of the plan year following the plan year to which it relates, e.g. Therefore, while it is permissible to make contributions throughout the year, we strongly recommended that plans with allocation conditions wait until the end of the year.įAQ: How late can a company deposit an employer contribution and still have it count against the overall limit for a given year?Ī: With a few exceptions, the limitation year is the same as the plan year. It is impossible to know if this, or other conditions will be met. If there are conditions in order to share in the contribution for the year, such as employment on the last day of the plan year. That is why we recommended that the deposit be made by the date of filing.įAQ: Can we deposit the company contribution throughout the year?Ī: It is specific to your plan’s provisions. However, please note that if the actual deposit is not made by the due date of the return and the amount of the deposit is different than anticipated, the company would need to file an amended return to adjust the deduction that was claimed. The deposit deadline is based on the due date (with extensions) of the tax return, not the date it is actually filed. However it must be deducted on the subsequent year’s return.įAQ: If we file the company return prior the due date of the company tax return, do we still have until the actual due date to make the deposit?Ī: Yes. In this Bulletin, we will try to make sense of this complex answer by reviewing some of the frequently asked questions about different deadlines.įAQ: When does a company have to deposit contributions in order to take them as a tax deduction for the year?Ī: In order for a company to deduct a contribution for a given year, it must be deposited by the due date (including extensions) of the company tax return.įAQ: Does that mean that if the deposit is not made by the due date of the tax return that it cannot be deducted?Ī: Fortunately, no. One set of regulations may specify one deadline for compliance purposes, but another set specifies a different deadline for deduction purposes. There are different rules depending on the purpose of the deadline. However, the company contributions, such as matching and profit sharing contributions, is a more complex answer. There is no notice requirement for plans electing the non-elective safe harbor contribution.“When is the deadline for depositing employee salary deferrals into the plan?” is a question we often hear that has a simple answer. This contribution must be made on behalf of every employee who is eligible for the plan (even for employees who do not defer any salary to the plan). The SECURE Act provides that an employer may adopt a 3% non-elective contribution safe-harbor retroactively if the amendment is adopted 30 days before the end of the plan year (or, if the non-elective contribution is 4% or more, if it is adopted by the end of the following plan year). The matching formula must be at least 100% of each employee’s contribution up to 3% plus 50% of the next 2% of the employee’s contribution (creating an effective 4% match for employees deferring at least 5% of their pay). If the employer wishes to elect a safe harbor matching contribution they must notify the participants prior to the start of each plan year. In addition, the employees must receive 100% full and immediate vesting on those contributions. Employers are required to make annual contributions that are determined under a matching formula or under a non-elective (e.g. The safe harbor requires that specific plan features be included. Plans that are designed with a “safe harbor” automatically pass these testing requirements. Generally, 401(k) plans that cover non-owner employees are subject to non- discrimination testing that ensures contributions are not skewed unfavorably toward business owners or other key or highly compensated employees.
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