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
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