A:

Unlike IRAs, where contributions can be made for the previous year up to April 15 of the current year, salary deferral contributions generally apply to they year in which they are actually withheld from the participant's wages/salary. For instance, assume that an employee makes an election to defer part of the bonus he will receive for the year 2006. The bonus is based on his 2006 compensation but is paid on January 31, 2007. The amount deferred from the bonus will apply to his 2007 salary deferral contributions.



To learn more on this topic, check out Making Salary Deferral Contributions - Part 1 and Part 2.



This question was answered by Denise Appleby
(Contact Denise)



RELATED FAQS
  1. Can you have a 403(b) and also contribute to a 401(k)?

    Yes. You may participate in both a 403(b) and a 401(k) plan. However, certain restrictions may apply to the amount you can ... Read Answer >>
  2. I have several jobs. Can I contribute the maximum to multiple employer retirement ...

    It depends. A question such as this requires detailed information in order to provide a helpful response. Here is a general ... Read Answer >>
  3. What are the 2014 401(k) contribution limits?

    Learn how limitations for 401(k) plans can change; find out what the contribution limits, annual limits and compensation ... Read Answer >>
  4. When are Simple IRA contributions due?

    Depositing SIMPLE IRA deferred compensation, matching and non-elective contributions when they are due will avoid penalties ... Read Answer >>
  5. Why are IRA, Roth IRAs and 401(k) contributions limited?

    Find out why contributions to IRA, Roth IRA and 401(k) retirement savings plans are limited by the IRS, including what the ... Read Answer >>
  6. The company I am working for said that 401(k) contribution can be based on only straight ...

    The regulation (law) that addresses your specific question has not changed. However, both employers may be right. Here's ... Read Answer >>
Related Articles
  1. Retirement

    Why are 401(k) contributions limited?

    Find out why contributions to 401(k) retirement plans are limited, including what the current contribution limits are and how limits encourage participation.
  2. Taxes

    401(k) And Qualified Plans: Contributions

    By Denise ApplebyA qualified plan may be funded by both employer and employee contributions. Contributions are mandatory for some plans and discretionary for others, but the limits on employer ...
  3. Retirement

    SIMPLE IRA Contribution Limits in 2016

    Learn the SIMPLE IRA contribution limits for 2016, with a brief summary of how the plan works, including eligibility and contribution and distribution rules.
  4. Taxes

    How To Save More For Your Retirement

    The Economic Growth and Tax Relief Reconciliation Act of 2001 made it easier to prepare for the future. Will you be ready?
  5. Personal Finance

    More Bonuses And Fewer Raises Affect Workers

    Companies are increasingly replacing salary increases with bonuses, much to the detriment of employees.
  6. Retirement

    How Much Can You Contribute to Your 401(k)?

    Given the fairly high compensation limits on these retirement plans, most workers can pitch in more than they currently do.
  7. Retirement

    Retirement Planning For 20-Somethings: Saving Options

    For the most part, you will be responsible for adding amounts to your retirement nest egg. However, if you work for an employer that provides benefits under a retirement plan, you may be able ...
  8. Options & Futures

    Which Retirement Plan Is Best?

    We'll show you how to choose between Roth IRAs, Traditional IRAs and 401(k)s.
  9. Retirement

    How Non-Qualified Deferred Compensation Plans Work

    These tax-advantaged retirement savings plans have their pros and cons, and employers and employees must follow strict guidelines.
  10. Entrepreneurship

    Deferred Compensation Plans for Small Business Owners

    Find out the best tax-qualified options business owners can use to defer their compensation and accumulate capital for their retirement.
RELATED TERMS
  1. Matching Contribution

    A type of contribution an employer chooses to make to his or ...
  2. Savings Incentive Match Plan For Employees Of Small Employers - SIMPLE

    A retirement plan that may be established by employers, including ...
  3. After-Tax Contribution

    A contribution made to any designated retirement or any other ...
  4. Employee Contribution Plan

    A company-sponsored retirement plan where employees may elect ...
  5. 457 Plan

    A non-qualified, deferred compensation plan established by state ...
  6. Cash Bonus

    A lump sum of money awarded to an employee, either occasionally ...
Trading Center