Deadlines
March 7th, 2006
SIMPLE IRA Deadlines
This section of SEP IRA & SIMPLE IRA information website is about deadlines for establishing SIMPLE IRA Plans and the deadlines for finding SIMPLE IRA Plans.
What is the deadline for establishing a SIMPLE IRA Plan?
A SIMPLE IRA plan must be established by October 1 in order for SIMPLE IRA contributions to be made for the current year. All SIMPLE IRA Plans must use the calendar year for all purposes (plans that start after January 1 and up to October 1 use a “short” year ending December 31 for their first plan year).
The SIMPLE IRA plan is adopted when the employer completes and signs the SIMPLE IRA Employer IRA Agreement. An employer may establish a SIMPLE plan effective on any date between January 1 and October 1 of any year, provided the employer did not maintain a SIMPLE or any other retirement plan during the same year.
A new employer may establish a SIMPLE plan as soon as administratively feasible (even after October 1).
If an employer previously maintained a SIMPLE plan, the employer may establish a SIMPLE plan effective only on January 1 of any year. If the employer maintains any other form of qualified retirement plan (pension, profit sharing, money purchase, 401(k), etc.) for which any employee either accrues an additional benefit or makes or receives a Contribution during a year, the employer may not maintain a SIMPLE IRA Plan during the same year.
Other plans must be terminated or frozen before the SIMPLE may be established. This is known as the “One Plan Rule“.
What is the deadline to fund a SIMPLE IRA Plan?
There are two types of SIMPLE IRA contributions:
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Salary deferral contributions and
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mandatory employer contributions. Each type of SIMPLE IRA Contribution has its own deadline:
Salary Deferral SIMPLE IRA Contributions: Salary Deferral SIMPLE IRA contributions must be deposited to the employees’ SIMPLE IRA accounts as soon as reasonably feasible but in no event later than 30 days after the month of deferral. Sole-proprietors can delay making the employee salary deferral Contribution until the business’s tax filing due date plus extensions.
Example: Salary withheld during the month of December 2004, must be deposited as soon as reasonably feasible but in no event later than January 30, 2005.
Mandatory Employer SIMPLE IRA Contributions: Mandatory employer SIMPLE IRA contributions (either matching or nonelective) for a year may be deposited at any time up to the due date for the employer’s Federal income tax return for the year, including extensions.
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