SEP Missed contribution from Employer
Hello, I have a quick question. I am still researching.
If an employer only funded SEP missed a prior year’s contribution … Say 2020 can they catch up on the Contribution this year?
Do they file an amended tax return or report it all as one contribution with this year’s tax return?
They are a nonprofit if that makes any difference.
Permalink Submitted by William Tuttle on Tue, 2022-04-05 16:25
Am employer with a SEP IRA plan is not required to make employer contributions for any given tax year.
Employer contributions for a tax year must be deposited by the tax filing deadline including extensions.
Therefore, it is too late to make SEP IRA employer contributions for the 2020 tax year.
You could “make up” the 2020 contributions in the 2021 tax year by making both year’s contributions for the 2021 tax year. The combined contribution rate would still be limited to 25% of compensation.
The total amount of both contributions would have to be deducted on the 2021 tax return.