401(k) contribution and plan establishment deadlines vary based on if you are an employer, an employee, and/or are setting up your first 401(k) plan. Some deadlines will even vary by business structure of your company. The following provides an overview of how it works.
Participant 401(k) Contribution Deadlines
The end of each year brings important 401(k) contribution deadlines to consider. Generally, the last business day of the year (in December) is the deadline for employees who make Roth contributions and/or for those over age 50+ catch-up contributions. As most employees contribute with each payroll, this happens automatically and any changes to deferral amounts often need to occur one to two weeks ahead of a payroll to be effective.
Note that Solo 401(k) owners can often do one-time contributions on any given day and are not typically beholden to payroll or other system restrictions. In addition, the self-employed starting their first Solo 401(k) that are sole proprietors or single-member LLCs, can start their plan up until their tax deadline for the previous year and still make contributions as an employee.
Employer 401(k) Contribution Deadlines
Employer contributions are generally made in the calendar year if they are making a matching contribution with each payroll. Yet, employers can make contributions until their tax deadline for the year (e.g. for 2023, the business typically has until April 15, 2024 if a c-corp, sole proprietor, single member LLC, or LLC taxed as a corporation, but is March 15, 2024 for a partnership, s-corp, or LLC taxed as a partnership).
This offers added flexibility for those doing one-time contributions, profit sharing, or other one-off arrangement. If you file a tax extension for your business, you typically have until the tax extension to make the employer contribution. Note that employer matching and profit-sharing contributions combined are limited to 25% of employee compensation. The same rules apply for all 401(k) plan employers including Solo 401(k) plan users who are typically both the employer and the employee. However, the Solo 401(k) that is sole proprietor or single-member LLC starting their first plan can typically do so until the 4/15 deadline and make employer contributions (and/or employee contributions as noted above).
401(k) Plan Setup Deadlines
Is this your first 401(k)? If so, for those with a calendar fiscal year, to qualify your plan for this tax year the deadlines are as follows:
Solo 401(k) Plan
- Can be established up until 4/15 – plan to purchase a day or two in advance minimum to ensure you’ve set it up. More complex Solo 401(k) plans (e.g. our Solo 401(k) Plus) may need to be set up a month in advance of the tax deadline.
- Employee contributions including Roth 401(k) monies may be made for first-time Solo 401(k) buyers up until the 4/15 tax deadline.
- Employer contributions and/or profit sharing may be made until your tax deadline as well but are made on a tax-deferred basis only.
- Must be established by 12/31 – plan to purchase a day to two weeks in advance minimum depending on the Solo 401(k) design complexity to ensure you meet the deadline.
- Employer contributions and/or profit sharing may be made until your tax deadline.
Safe Harbor 401(k) Plan
- Must be established by 10/1 – plan to purchase 2-6 weeks in advance to ensure your plan completes setup. More complex designs can create a longer time to establish.
- Safe Harbor plans not set up by 10/1 will become effective as of January 1st and qualify for the following tax year.
- Employer contribution and/or profit sharing may be made until your tax deadline.
Traditional 401(k) Plan
- Must be established and set up by 11/15 to be ready in the current calendar year.
- Most needing to purchase during this time frame are looking to deduct employer contributions for the current tax year. Your employer contribution and/or profit sharing may be made until your tax deadline. However, it is expected no employee contributions would be made or qualify for the current tax year.
Note: If your business is run on a non-calendar fiscal year, plan establishment date deadlines will vary. Most businesses choose to run their plan on a calendar year regardless of their fiscal year given annual contribution rule changes and ease of management.