Funding Due Date Approaching!
For Your Clients On Extension
In order for a contribution allocated in 2021 to qualify as a 2021 tax deduction, an employer must typically fund the contribution by the due date of its tax return, including extensions.
However, even though some employers may be able to extend the filing of their return until October 15, 2022 if they sponsor Defined Benefit Plans, including Cash Balance Plans, there is a Statutory Funding deadline of September 15, 2022.
Don’t hesitate to reach out if you have questions.
There’s still time for 2016 tax savings…but it is running out!!
With proper 401(k) retirement plan design techniques, clients can reduce taxes, improve owner benefits, and lower employee costs:
$53,000 individual deduction limits for 401(k)/profit sharing plans. If 50 or older, up to $59,000 can be funded into 401(k).
Contributions of up to $300,000 for small business owners in Defined Benefit plans (depends on age and service).
IRS tax credit of $500 per year for the first 3 years of the plan for installation and administrative costs if your client has employees.
Uni-K plan to maximize deductions for self-employed, owner-only or owner-spouse business owners with low W-2 wages (i.e. deduct $28,000 with only $40,000 in wages; if 50 or older, deduction increases to $34,000.
DON’T DELAY: Plans must be adopted by December 31, 2016 (but plans don’t have to be funded until 2017).
