What Is the S-Corp Profit Sharing Contribution Deadline?

An S-corporation profit sharing plan is a type of retirement plan where the employer’s contributions are discretionary. This means the company can decide each year whether and how much to contribute for its employees. For S-corporation owners, understanding the specific deadlines associated with these plans is important for managing tax deductions effectively. The timing of both establishing the plan and making contributions directly impacts the tax year in which the deduction can be claimed.

Establishing the Plan Deadline

Before an S-corporation can make a tax-deductible contribution to a profit-sharing plan, a formal plan must exist. This is accomplished by executing a written plan document. Historically, this document needed to be signed by the end of the tax year, December 31 for calendar-year businesses, for the plan to be effective for that year.

Recent legislative changes, specifically the Setting Every Community Up for Retirement Enhancement (SECURE) Act, have provided businesses with more flexibility. An S-corporation can now establish a new profit-sharing plan for a specific tax year up until the due date of the company’s tax return for that same year, including any filed extensions. This means a business can decide to set up a plan for the 2025 tax year well into 2026, as long as it’s done before the tax return is filed.

For an S-corporation with a calendar year-end, the tax return is typically due on March 15. By filing an extension, this deadline shifts to September 15. Therefore, the S-corporation has until September 15, 2026, to formally sign the plan documents and still have the plan be effective for the 2025 tax year, allowing for a deduction on the 2025 tax return.

This retroactive adoption capability applies to the employer’s profit-sharing contribution portion of the plan. If the plan also includes an employee salary deferral component, often seen in 401(k) plans, those deferrals can only be made prospectively after the plan is established.

Determining the Contribution Deadline

Once a profit-sharing plan is established, the deadline for funding the contribution determines its deductibility on the S-corporation’s tax return. The rules provide a standard deadline and an extended deadline, which are directly linked to the corporation’s income tax filing schedule.

The standard deadline for an S-corporation to deposit a profit-sharing contribution is the initial due date of its corporate tax return, Form 1120-S. For the vast majority of S-corporations that operate on a calendar year, this date is March 15 of the following year. For a contribution to be deducted on the 2025 tax return, the funds must be deposited into the plan’s trust account by March 16, 2026 (since March 15, 2026, falls on a Sunday), assuming no tax extension is filed.

When an S-corporation files Form 7004, it automatically extends the deadline to make the profit-sharing contribution. The new deadline becomes the extended due date of the tax return, which is six months after the original due date.

This means a calendar-year S-corporation that files an extension has until September 15 to fund its prior-year profit-sharing contribution. For example, a contribution for the 2025 plan year can be made as late as September 15, 2026, and still be fully deductible on the 2025 Form 1120-S. This extension gives the business owner additional time to manage cash flow.

Making the Contribution

The physical act of making the contribution involves moving funds from the corporation’s bank account to the plan’s trust. The process differs slightly depending on whether the contribution is for a non-shareholder employee or a shareholder-employee, with the latter having a specific and often misunderstood requirement related to their compensation.

For non-shareholder employees, the S-corporation simply transfers the calculated profit-sharing amount from its general business operating account into the designated retirement plan trust account. The corporation then reports this amount as a deduction on its Form 1120-S tax return.

The rules are different and more complex for shareholder-employees who own more than 2% of the S-corporation’s stock. For a profit-sharing contribution to be deductible for these individuals, the amount is considered a form of compensation. As such, the contribution amount must be included in the shareholder’s gross wages on their Form W-2 for the year the contribution relates to.

Even though the cash for the contribution might not be deposited until the following year’s tax deadline, the decision on the amount of the contribution must be made before the final payroll of the year is processed. For instance, the profit-sharing contribution amount for a shareholder-employee for the 2025 tax year must be determined and included on their 2025 Form W-2, even if the S-corporation waits until September 2026 to actually fund it.