By Edward “Ed” V. O’Neal, Senior Vice President and Manager, Retirement Plans
If the recent turbulent times have taught us anything, it’s the need to remain flexible! Over the past 12 to 14 months, we’ve all had to react to issues ranging from a health pandemic, shifting work environments, new regulations and erratic markets forcing us to adjust to what feels like a constantly changing environment.
Continuing the theme of adjustment and flexibility, this time perhaps in a good way, the IRS has announced an extension to the due date for individual taxpayers to file their 2020 tax returns and make federal tax payment from April 15, 2021 to May 17, 2021. The IRS recently provided clarification that the deadline extension also applies to contributions to IRAs (traditional and Roth), health savings accounts (HSAs) and Coverdell education savings accounts, and postpones the time for reporting and payment of the 10% additional tax on amounts includible in gross income from 2020 distributions from IRAs and workplace-based retirement plans. In addition, the deadline for recharacterizing IRA contributions, removing excess contributions (so there is no 6% excise tax), or repaying qualified plan loan offsets has also been extended to May 17.
If you are self-employed and sponsor a retirement plan such as a SEP IRA or Solo 401(k) plan, the deadline for your employer contributions has also now been extended to May 17, 2021. However, unlike traditional and Roth IRAs, if you file for an extension of time to complete your self-employed business tax return, you will have until the extended deadline to make any employer contributions for 2020.
Some individuals will get even more time to file and make IRA contributions this year. If you reside in a declared federal disaster area due to the February winter storms in Texas, Louisiana and Oklahoma, you will have until June 15, 2021 to file returns, make tax payments (including estimated tax payments) and make IRA contributions.
Despite multiple tax deadline extensions, there are some tax dates that remain unchanged. For example, April 15, 2021 remains the deadline for estimated tax payments. Given all these changes, it’s more important than ever to check with your tax preparer for details and to confirm your tax filing deadline.
Benjamin F. Edwards does not provide tax advice; therefore, it is also important to consult with your tax professional for additional guidance tailored to your specific situation.