Extension on IRA contributions

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BWCA654731
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Extension on IRA contributions

Post by BWCA654731 » Fri Mar 20, 2020 6:23 pm

I read the deadline to file taxes is extended. Is the date to make IRA contributions also extended?

Alan S.
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Re: Extension on IRA contributions

Post by Alan S. » Fri Mar 20, 2020 6:33 pm

I expect so if nothing else addresses this issue since Sec 219(f)(3) indicates the contribution must be made by the due date for filing the return. The due date has been changed, so the contribution deadline would also change.

However, there might be additional conditions stated with this due date change that have not been released yet. Stay tuned.

TIAX
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Re: Extension on IRA contributions

Post by TIAX » Sun Mar 22, 2020 11:47 am

Alan S. wrote:
Fri Mar 20, 2020 6:33 pm
I expect so if nothing else addresses this issue since Sec 219(f)(3) indicates the contribution must be made by the due date for filing the return. The due date has been changed, so the contribution deadline would also change.

However, there might be additional conditions stated with this due date change that have not been released yet. Stay tuned.
Are you sure about this? IRC 219(f)(3) requires that the contribution be "made not later than the time prescribed by law for filing the return for such taxable year (not including extensions thereof)" and the IRS announcement (is there something more official?) states that the due date is "extended from April 15, 2020, to July 15, 2020."

Alan S.
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Re: Extension on IRA contributions

Post by Alan S. » Sun Mar 22, 2020 1:09 pm

Not totally sure, since the IRS has not confirmed this yet. And when they do, there is no guarantee that a given custodian's systems would be able to assign contributions made after 4/15 to 2019. Perhaps a custodian cannot change their system by 4/15, but may do so before 7/15.

Would have been nice if the IRS Release addressed the other issues affected by this ruling.

I get your point that the Notice does not change the law, it grants a one time exception to the filing deadline as allowed under the Stafford Act.
Custodians need to be informed soon because their systems will release a 5498 reporting 2019 contributions in May. They would need to hold that report until August if 2019 contributions could be made until 7/15.

We have such a complex web of regulations, that a seemingly simple change triggers many related questions, but the IRS has considerable authority to interpret the law. This can be orderly or messy and rolling out these changes on a weekly basis will be very messy, maybe even chaotic.

TIAX
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Re: Extension on IRA contributions

Post by TIAX » Mon Mar 23, 2020 1:47 pm

Alan S. wrote:
Sun Mar 22, 2020 1:09 pm
Not totally sure, since the IRS has not confirmed this yet. And when they do, there is no guarantee that a given custodian's systems would be able to assign contributions made after 4/15 to 2019. Perhaps a custodian cannot change their system by 4/15, but may do so before 7/15.

Would have been nice if the IRS Release addressed the other issues affected by this ruling.

I get your point that the Notice does not change the law, it grants a one time exception to the filing deadline as allowed under the Stafford Act.
Custodians need to be informed soon because their systems will release a 5498 reporting 2019 contributions in May. They would need to hold that report until August if 2019 contributions could be made until 7/15.

We have such a complex web of regulations, that a seemingly simple change triggers many related questions, but the IRS has considerable authority to interpret the law. This can be orderly or messy and rolling out these changes on a weekly basis will be very messy, maybe even chaotic.
That makes sense. Hopefully, the custodians will reach out to the IRS, who will issue guidance. In the meantime, it seems the better course of action would be to make 2019 contributions by April 15.

LookinAround
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Re: Extension on IRA contributions

Post by LookinAround » Mon Mar 23, 2020 2:04 pm

BWCA654731 wrote:
Fri Mar 20, 2020 6:23 pm
I read the deadline to file taxes is extended. Is the date to make IRA contributions also extended?
Your tax return IS STILL DUE APR 15. You've only been granted an extension to July 15 to pay any tax owed. So IMHO it doesn't allow extending IRA contributions.

lakpr
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Re: Extension on IRA contributions

Post by lakpr » Mon Mar 23, 2020 2:23 pm

LookinAround wrote:
Mon Mar 23, 2020 2:04 pm
Your tax return IS STILL DUE APR 15. You've only been granted an extension to July 15 to pay any tax owed. So IMHO it doesn't allow extending IRA contributions.
That's old news. More recent news is that both the tax-owed and tax-return dates are extended to July 15, 2020.

https://www.cnet.com/how-to/coronavirus ... o-july-15/
If dealing with the effects of coronavirus has put you behind schedule for preparing and paying your taxes this year, the US Treasury will give you 91 more days to pay your federal taxes without a penalty. You'll now have until July 15 to file your tax returns, whether you're an individual, trust and estate, corporation and other noncorporation. You can also request an extension beyond July 15.
Emphasis mine.

LookinAround
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Re: Extension on IRA contributions

Post by LookinAround » Mon Mar 23, 2020 2:38 pm

lakpr wrote:
Mon Mar 23, 2020 2:23 pm

That's old news. More recent news is that both the tax-owed and tax-return dates are extended to July 15, 2020.
Ahhh. OK. I see the IRS did that two days ago. My mistake

lakpr
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Re: Extension on IRA contributions

Post by lakpr » Mon Mar 23, 2020 2:46 pm

LookinAround wrote:
Mon Mar 23, 2020 2:38 pm
Ahhh. OK. I see the IRS did that two days ago. My mistake
No worries ... your other contention, is still true though.
So IMHO it doesn't allow extending IRA contributions
Not because IRS does not allow it, but because most IRA custodians cannot make changes to their software to extend the 2019 contributions to beyond April 15th. I work for a financial firm, and in my company, all non-essential production changes are kept on indefinite hold. I think firms like Vanguard / Fidelity / Schwab, even if they want to, may not be able to fully implement this change within the next 3 weeks.

Edit: I see Alan S. and TIAX are making the same point above in the thread. My fault for not reading the thread completely before responding ...

Spirit Rider
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Re: Extension on IRA contributions

Post by Spirit Rider » Tue Mar 24, 2020 2:02 pm

TIAX wrote:
Sun Mar 22, 2020 11:47 am
Alan S. wrote:
Fri Mar 20, 2020 6:33 pm
I expect so if nothing else addresses this issue since Sec 219(f)(3) indicates the contribution must be made by the due date for filing the return. The due date has been changed, so the contribution deadline would also change.

However, there might be additional conditions stated with this due date change that have not been released yet. Stay tuned.
Are you sure about this? IRC 219(f)(3) requires that the contribution be "made not later than the time prescribed by law for filing the return for such taxable year (not including extensions thereof)" and the IRS announcement (is there something more official?) states that the due date is "extended from April 15, 2020, to July 15, 2020."
First, to address the issue of prescribed by law. On March 13th, President Trump declared a national emergency. There are important reasons for such a declaration. All through the federal code there are contingencies in existing law granting legal authority for remedies.

26 U.S. Code § 7508A. Authority to postpone certain deadlines by reason of Presidentially declared disaster or terroristic or military actions. Grants the Secretary of the Treasury or his delegate the authority to postpone the time for performing certain acts under the internal revenue laws for a taxpayer determined by the Secretary to be affected by a Federally declared disaster period of up to one year may be disregarded in determining whether the performance of certain acts is timely under the internal revenue laws.

Second, It was unfortunate that they used the term "extended", but an IRS news release does not constitute substantial authority. The actual substantial authority exists in IRS guidance Notice 2020-18, III. GRANT OF RELIEF, page 2, 2nd paragraph.

For an Affected Taxpayer, the due date for filing Federal income tax returns and making Federal income tax payments due April 15, 2020, is automatically postponed to July 15, 2020. Affected Taxpayers do not have to file Forms 4868 or 7004. There is no limitation on the amount of the payment that may be postponed.

The term prescribed by law does not just mean the literal text of the law, but actions, modifications and remedies taken by the executive branch under authority of the law.
  • President Trump declared a national Emergency concerning COVID-19 on March 13th and the IRS issues guidance under that authority on March 21st to postpone (not extending) the tax filing deadline. The tax filing deadline prescribed by law is postponed until 07/15/2020 as is the IRA contribution deadline by reference.
It may seem like semantics, but it is not. The taxpayer extends, the IRS postpones. Otherwise, how could the IRS postpone the tax filing/IRA contribution deadlines beyond April 15th due to emancipation day or for some people Patriots day

Spirit Rider
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Re: Extension on IRA contributions

Post by Spirit Rider » Tue Mar 24, 2020 9:03 pm

Fidelity has posted the following on their website;

"IRS Notice 2020-18 Relief for Taxpayers extended the 2019 federal tax filing, payment, and IRA contribution deadline from April 15 to July 15, 2020"

bsteiner
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Re: Extension on IRA contributions

Post by bsteiner » Tue Mar 24, 2020 9:39 pm

BWCA654731 wrote:
Fri Mar 20, 2020 6:23 pm
I read the deadline to file taxes is extended. Is the date to make IRA contributions also extended?
Yes. See Q&A 17 in today's IRS Q&As: https://www.irs.gov/newsroom/filing-and ... nd-answers.

Spirit Rider
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Re: Extension on IRA contributions

Post by Spirit Rider » Tue Mar 24, 2020 10:46 pm

bsteiner wrote:
Tue Mar 24, 2020 9:39 pm
BWCA654731 wrote:
Fri Mar 20, 2020 6:23 pm
I read the deadline to file taxes is extended. Is the date to make IRA contributions also extended?
Yes. See Q&A 17 in today's IRS Q&As: https://www.irs.gov/newsroom/filing-and ... nd-answers.
Not only does the Q&A indicate that the 7/15/20 deadline applies to IRA contributions (Q&A 17), but also HSA contributions (Q&A 21) and employer contributions to 401k (including one-participant) SEP and SIMPLE IRA plans (Q&A 20). This would also include one-participant 401k employee deferrals of sole proprietors by reference.

This makes sense, because all of those deadlines are directly linked to the tax filing deadline.

Alan S.
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Re: Extension on IRA contributions

Post by Alan S. » Tue Mar 24, 2020 11:01 pm

Interesting to note that the return of excess deferrals with income per 402(g) has a deadline of 4/15, however in this case 4/15 is just a date and not treated as the tax due date.

Therefore, IRS QA 19 confirms that these excess deferrals must still be distributed by 4/15.

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HueyLD
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Re: Extension on IRA contributions

Post by HueyLD » Wed Mar 25, 2020 6:34 am

Spirit Rider wrote:
Tue Mar 24, 2020 2:02 pm
TIAX wrote:
Sun Mar 22, 2020 11:47 am
Alan S. wrote:
Fri Mar 20, 2020 6:33 pm
I expect so if nothing else addresses this issue since Sec 219(f)(3) indicates the contribution must be made by the due date for filing the return. The due date has been changed, so the contribution deadline would also change.

However, there might be additional conditions stated with this due date change that have not been released yet. Stay tuned.
Are you sure about this? IRC 219(f)(3) requires that the contribution be "made not later than the time prescribed by law for filing the return for such taxable year (not including extensions thereof)" and the IRS announcement (is there something more official?) states that the due date is "extended from April 15, 2020, to July 15, 2020."
First, to address the issue of prescribed by law. On March 13th, President Trump declared a national emergency. There are important reasons for such a declaration. All through the federal code there are contingencies in existing law granting legal authority for remedies.

26 U.S. Code § 7508A. Authority to postpone certain deadlines by reason of Presidentially declared disaster or terroristic or military actions. Grants the Secretary of the Treasury or his delegate the authority to postpone the time for performing certain acts under the internal revenue laws for a taxpayer determined by the Secretary to be affected by a Federally declared disaster period of up to one year may be disregarded in determining whether the performance of certain acts is timely under the internal revenue laws.

Second, It was unfortunate that they used the term "extended", but an IRS news release does not constitute substantial authority. The actual substantial authority exists in IRS guidance Notice 2020-18, III. GRANT OF RELIEF, page 2, 2nd paragraph.

For an Affected Taxpayer, the due date for filing Federal income tax returns and making Federal income tax payments due April 15, 2020, is automatically postponed to July 15, 2020. Affected Taxpayers do not have to file Forms 4868 or 7004. There is no limitation on the amount of the payment that may be postponed.

The term prescribed by law does not just mean the literal text of the law, but actions, modifications and remedies taken by the executive branch under authority of the law.
  • President Trump declared a national Emergency concerning COVID-19 on March 13th and the IRS issues guidance under that authority on March 21st to postpone (not extending) the tax filing deadline. The tax filing deadline prescribed by law is postponed until 07/15/2020 as is the IRA contribution deadline by reference.
It may seem like semantics, but it is not. The taxpayer extends, the IRS postpones. Otherwise, how could the IRS postpone the tax filing/IRA contribution deadlines beyond April 15th due to emancipation day or for some people Patriots day
+1. Thanks for posting your informative and thoughtful comments.

Spirit Rider
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Re: Extension on IRA contributions

Post by Spirit Rider » Wed Mar 25, 2020 6:50 am

Alan S. wrote:
Tue Mar 24, 2020 11:01 pm
Interesting to note that the return of excess deferrals with income per 402(g) has a deadline of 4/15, however in this case 4/15 is just a date and not treated as the tax due date.

Therefore, IRS QA 19 confirms that these excess deferrals must still be distributed by 4/15.
Yes, this still true even when 4/15 is on a weekend or a holiday. The fact that the due date in those circumstance is automatically postponed, is also irrelevant.

LookinAround
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Re: Extension on IRA contributions

Post by LookinAround » Wed Mar 25, 2020 7:18 am

re: Estmated Tax Palyemts As I went to look it up to be certain

For those of us who make quarterly estimated tax payments, both first and second quarter payments for TY2020 are due July 15, 2020

Spirit Rider
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Re: Extension on IRA contributions

Post by Spirit Rider » Wed Mar 25, 2020 10:48 am

LookinAround wrote:
Wed Mar 25, 2020 7:18 am
re: Estmated Tax Palyemts As I went to look it up to be certain. For those of us who make quarterly estimated tax payments, both first and second quarter payments for TY2020 are due July 15, 2020
Where exactly did you "look this up?"

Less than 24 hours age the IRS published Filing and Payment Deadlines Questions and Answers

Q16. The Notice postpones the deadline for first quarter 2020 estimated income tax payments due on April 15, 2020. What about second quarter estimated tax payments due on June 15? Have they been postponed as well?
A16. No, second quarter 2020 estimated income tax payments are still due on June 15, 2020[/b]. First quarter 2020 estimated income tax payments are postponed from April 15 to July 15, 2020.

LookinAround
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Re: Extension on IRA contributions

Post by LookinAround » Wed Mar 25, 2020 11:04 am

Spirit Rider wrote:
Wed Mar 25, 2020 10:48 am
Where exactly did you "look this up?"

Less than 24 hours age the IRS published Filing and Payment Deadlines Questions and Answers

Q16. The Notice postpones the deadline for first quarter 2020 estimated income tax payments due on April 15, 2020. What about second quarter estimated tax payments due on June 15? Have they been postponed as well?
A16. No, second quarter 2020 estimated income tax payments are still due on June 15, 2020[/b]. First quarter 2020 estimated income tax payments are postponed from April 15 to July 15, 2020.
IRS Updated guidelines published March 21
https://www.irs.gov/newsroom/payment-de ... ly-15-2020

"This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020."

/* EDIT */
On second read, where's the conflict? Both publications say that first quarter ES payments aren't due till July 15. Which is what I said
" ... both first and second quarter payments for TY2020 are due July 15, 2020

Spirit Rider
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Re: Extension on IRA contributions

Post by Spirit Rider » Wed Mar 25, 2020 12:12 pm

LookinAround wrote:
Wed Mar 25, 2020 11:04 am
/* EDIT */
On second read, where's the conflict? Both publications say that first quarter ES payments aren't due till July 15. Which is what I said
" ... both first and second quarter payments for TY2020 are due July 15, 2020
Second quarter payments are not due on 7/15/20, they as always are due on 6/15/20.

LookinAround
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Re: Extension on IRA contributions

Post by LookinAround » Wed Mar 25, 2020 12:37 pm

Yep. I misread... LOL Of course now 2nd quarter payment is due before the 1st quarter payment :oops:

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