Solo 401K for S Corp? (Adoption & Effective Dates)
Hello. I own an S Corp, and I'm the sole W2 employee. I pay myself a reasonable salary through the payroll service I use. I plan to setup a Solo 401K (self directed), and have a few questions regarding this. A Solo 401K consists of two aspects: (1) an employee salary deferral, and (2) an employer profit sharing contribution (limited to 25% of employee's W2 salary for incorporated entities).
1. Can my employee salary deferrals begin BEFORE my "401K plan adoption date?" In other words, can I start my 401K employee salary deferrals NOW, even though it will take about 5-10 days for the company to setup & mail me the 401K plan paperwork? Also, can the "effective date" be set for January 1st of this year? In other words, is the Solo 401K "effective date" retroactive (like HRA plans are)?
2. Can I wait until year-end (Dec. 31st) to make the employer profit sharing contribution? Since the maximum employer profit sharing contribution is 25% of W2 pay, I'd like to see what my total W2 amount is, and then adjust accordingly. In other words, I'd prefer to make a lump-sum contribution at year-end (instead of smaller contributions w/ each paycheck). Is this OK?