2023 SEP IRA Contribution Deadline

[SteveStang]

I have a client who prepared his own tax returns for TY2023. In reviewing them, there is noted a Schedule C for an LLC (disregarded) with a positive net profit of about $28k. On Schedule 1, he calculated a SEP IRA contribution of about $5k+ (the 20% limit). He filed the return without extension. Although the $5k SEP IRA was noted on the return, he didn't make the contribution yet. He wants to make the contribution now (October 2024). As I understand the rule, he would need to have made the contribution by the April 15 personal filing deadline (same deadline as the disregarded business entity). But if he had put his return on extension, he would have had until the extension deadline (10/15). I have no idea how his custodian (Fidelity) will report it but their website offers general information about SEPs and mentions the regular personal deadline being the same for a SEP contribution UNLESS it was on extension. Am I misreading this? Can he still make the contribution for TY2023?

[jmcdtax]

The client needs to amend the 2023 return removing the SEP contribution. Client and can contribute for 2024 by April 15th, 2025.

[terryats]

You have until 4/15/2024 or if extension filed, until end of that period. From IRS Link. https://www.irs.gov/retirement-plans...#contributions

When must I deposit the contributions into the SEP-IRAs?

You must deposit contributions for a year by the due date (including extensions) for filing your federal income tax return for the year. If you obtain an extension for filing your tax return, you have until the end of that extension period to deposit the contribution, regardless of when you actually file the return.

[SteveStang]

Terryats, but he hadn't filed an extension. This is why I'm inclined to advise him to amend, pay the tax, and contribute for TY2024 as jmcdtax has noted.

[terryats]

I agree Steve, he needs to amend, because his deadline was 4/15/24 to deposit the contribution for 2023 being he did not file extension ( I missed he did not extend). He can then make a contribution for 2024 based on his 2024 tax by 4/15/2025, or 10/15/2025 if he extends 2024.

[SteveStang]

Thank you both for validating what I thought. I wanted to be sure before I broke the bad news to the client. Proof once again that Turbo Tax only gets folks so far and can't help them avoid mistakes like funding an IRA. Cheers.