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When are Simple IRA contributions due?

Modified on: 2018/07/12
A:

According to the IRS, contributions to SIMPLE IRA plans that are taken from an employee's pay check as a salary reduction are due within 30 days of the month in which the deferred payments were taken. For contributions taken from an employee's pay in September, for instance, the contributions must be deposited into the SIMPLE plan by Oct. 30 of the same year. If the SIMPLE IRA is set up for someone who is self-employed and there are no employees, contributions that are reductions in pay must be deposited within 30 days of the end of the year - Jan. 30th. An employer may choose to make either matching contributions to an employee's SIMPLE IRA, from 1% to 3% of his or her salary, or non-elective contributions of 2% of the employee's salary no matter what the employee contributes. Contributions made on the part of the employer are due by the business' filing due date for the tax year - usually April 15, or Oct. 15 if there is an extension. However, there are Department of Labor rules governing SIMPLE IRA plans that are different from IRS requirements. According to the DOL, an employer must make contributions that are taken from an employee's salary to the IRA as soon as he or she can reasonably do so, but no later than 7 business days for businesses with fewer than 100 employees; this does not generally apply to owners with no employees or with only an employee who is a spouse. Contributions that are not made in a timely manner may incur fees or necessitate the filing of an amended tax return.


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