What Are the Individual 401k Contribution Deadlines?
For a Solo 401(k), contribution deadlines are nuanced and depend on when the plan is established and when you file your business taxes.
An Individual 401(k), also known as a Solo 401(k), is a retirement plan for self-employed individuals and small business owners with no employees other than a spouse. This plan allows the owner to contribute as both the “employee” and the “employer,” enabling much higher contribution amounts than IRAs. Understanding the deadlines for establishing the plan and making contributions is important for maximizing tax deductions. The timelines for these actions are distinct and governed by separate rules.
Deadline for Establishing a New Plan
The first deadline is for the formal creation of the Individual 401(k) plan. To make employee contributions for a specific tax year, the plan documents must be signed and adopted by December 31 of that year. Signing the documents by this date secures the ability to make these contributions later.
The SECURE 2.0 Act provides more flexibility for establishing a new plan. A business owner can establish a plan after December 31 and still make employer contributions for the prior year. This retroactive establishment can be done up until the business’s tax filing deadline, including extensions. However, the ability to make an employee contribution for that year would be forfeited.
Section 317 of the SECURE 2.0 Act allows a sole proprietor establishing a new plan for the first time to do so up until their personal tax filing deadline, without extensions, and make both employee and employer contributions for the prior year. This provision for an initial plan year is a unique option not available to incorporated businesses.
Employee Contribution Deadlines
The “employee” contribution, also known as an elective deferral, is what the business owner pays into the plan from their compensation. For the 2025 tax year, an individual can contribute up to $23,500. Those age 50 or over can make an additional catch-up contribution of $7,500, for a total of $31,000. These limits apply to the individual, so if they also contribute to another employer’s 401(k), the total from all sources cannot exceed this annual limit.
The deadline for the election to make an employee contribution is the end of the business’s tax year, which for most is December 31. The deadline for the deposit of these funds depends on the business structure. For a sole proprietorship or a single-member LLC, the employee contribution must be deposited by the personal tax filing deadline of April 15, not including extensions.
For business owners of an S-corporation or C-corporation, the rules are different because they are paid W-2 wages. Their employee deferrals must be made from payroll throughout the year. The final contribution comes from the last paycheck of the year, and the deferral election must be in place before that compensation is earned. This structure does not allow for a lump-sum employee contribution to be made after the year has closed.
Employer Contribution Deadlines
The “employer” contribution, also known as a profit-sharing contribution, is made by the business to the owner’s plan. This amount is calculated as a percentage of compensation. For an incorporated business like an S-corp, the contribution can be up to 25% of the owner’s W-2 salary. For an unincorporated business like a sole proprietorship, the calculation is based on net self-employment income, which works out to a maximum of 20% after adjustments.
The deadline for making the employer contribution is the business’s tax filing deadline, including any timely filed extensions. For a sole proprietor or a C-corporation, the initial deadline is April 15, 2025, for the 2024 tax year. If a tax extension is filed, this deadline is pushed to October 15, 2025. For S-corporations and partnerships, the initial deadline is March 15, and an extension moves it to September 16.
The total combined contributions from both the employee and employer cannot exceed the overall annual limit set by the IRS. For 2024, this limit is $69,000, or $76,500 for those age 50 and over. For 2025, the total limit increases to $70,000, or $77,500 with the catch-up contribution.