Sep

[Lion]

SEP contributions must be made by the return due date, including extensions. So, can a couple file their return now, claiming the SEP contributions, and not actually make the contributions until 15 October? They did file an extension.

[BHoffman]

Yep on the SEP. The extension applies for all of my clients. I don't know if different plans have different requirements. You might want to ask the administrator.

[Lion]

If no extension filed...

If no extension is actually filed, do they still have until 15 October to make their 2008 SEP contribution and deduct it on their 2008 return?

I'm thinking of a couple of clients with SIMPLEs who constantly forget to make their contributions by 15 April, so I end up amending their returns over the summer. Maybe I should urge them to open a SEP. Can they open a SEP through next 15 October, even if they file before 15 April? Even if they don't file an extension? In other words, does it have to be THEIR OWN extension deadline as the contribution deadline? Or is it the extension deadline that's the contribution deadline without referring to a specific return?

Can my gal who forgot to contribute to her SIMPLE this April but has already filed her return still open a SEP for 2008 and contribute to it?

I'm getting more self-employed clients and need to learn about retirement plans and HSAs and new things to do my best for them. Time to look for my courses for this year.

Thanks for your help.

[JohnH]

Lion:
They have until the due date of the return, including extensions, to make the contribution. So the answer to your question would be that the entity making the SEP contribution must have an extension in place in order to make a SEP contribution after its normal filing date. For a Sched C filer that would be Apr 15 extended to Oct 15, and for a Calendar year corp it would be Mar 15 extended to Sep 15.

This is one of several reasons that I almost always insist that my corp clients file extensions, even if they don't ask for or need one. (The other reason is that it's a little extra insurance against their forgetting to file since I'm still a paper-filing neandertal).

I also encourage Schedule C filers to file an extension if there's even a remote possibility that they might be able to make a SEP contribution before Oct 15. It gives them an extra 6 months to decide, and the logic is impeccable to them if they're already a chronic procrastinator.

[Lion]

Thank you

Thank you, B & H. That's what I needed to know, but was unsure I understood what I read.

For the couple that was the reason for my original question, I'll be delivering their returns next week. However, they won't be able to raise the funds to max out their SEPs until after they pay college tuition this July. We did file extensions. So, we can electronically file now with their SEP deductions even though they'll fund them later.

I have a couple of other clients that have forgotten to make SIMPLE contributions (one forgot more than once!). For future years, I will suggest a SEP plan and also explain the flexibility gained by filing extensions. Unfortunately, they filed by 15 April this time and do not have extensions for 2008.