Cash balance plans have straightforward deadlines to follow. The deadline for opening your plan and making contributions is the same, due on the date your business taxes are due (including deadlines). Partnerships and S corporations who follow the calendar year are required to make their contribution in full by March 15, 2024 for the 2023 tax year, and C corporations and sole proprietorships have until April 15, 2024. The deadline can be extended to give you more time to open your plan and make contributions. However, for all business entities, the final date to make a full contribution is September 15, 2024.
Contribution deadlines for 2023
You have until the date you file your federal taxes to both establish your plan and make contributions to your cash balance plan. Business owners may also file for an extension, which would give them until September 15, 2024 to open a plan and make contributions. However, setting up a cash balance plan takes time. Ideally, you should try to set up the plan at least four to six weeks before you file your return.
The final day for contributions is September 15
Partnerships and S corporations file their taxes one month earlier (on March 15) than C corporations and sole proprietorships do (on April 15). However, for cash balance plans, the final deadline to open a plan and make contributions is September 15. This extended deadline date is the same for all business structures. Even if your tax return is extended until October 15, cash balance plan contributions must be made in full by September 15.
Partnerships and S corporations
March 15, 2024: Partnerships and S corporations not filing for an extension must set up their plans and fund employer contributions to receive tax deductions for the 2023 tax year.
September 15, 2024: If an extension was requested, this is the last day to fund employer contributions for partnerships and S corporations.
C corporations and sole proprietorships
April 15, 2024: C corporations and sole proprietorships not filing for an extension must set up their plans and fund employer contributions to receive tax deductions for the 2023 tax year.
September 15, 2024: If an extension was requested, this is the last day to fund employer contributions for sole proprietorships and C corporations.
Important deadline for S corporations
While you technically have until the federal tax deadline the following year to set up your account and make contributions, if you’re an owner of an S corporation, you should try to open your plan before the end of the tax year you want to make contributions for. For example, for making 2023 contributions, you should adopt a cash balance plan before December 31, 2023, ideally in the Fall to make sure you have plenty of time.
Adopting the plan before the year end allows you to get an appropriate W-2 that will support your cash balance plan contributions. Near the actual deadline, there may not be enough time to adjust the applicable W-2.
How to report contributions on your tax return
Cash balance plans are complex with varying contribution limits for participants in the plan. It’s important to consult a financial professional when deducting cash balance plan contributions.
Penalties for late contributions
If you fail to make contributions on time, there will be a 10% excise tax on the total unpaid amount. You will need to file Form 5330 to report the 10% excise tax. As the employer, you’ll also be required to notify all participants in the plan that the minimum funding requirements were not met.