SIMPLE IRA recoding of contribution year

I have a client that made a deposit into their SIMPLE IRA on 1/25/2021 for $13,380. The deposit was initially coded as a 2020 Employee SIMPLE IRA contributions.

We need to reprocess this coding as a 2021 Employee SIMPLE IRA contributions.

Logic would tell me that the $13,380 would just become the client’s 2021 SIMPLE IRA employee contributions YTD. Because had the contribution been coded as a 2021 contribution back in January none of the earnings on those funds would count towards their 2021 contribution limit.

Our operations department is stating that the earnings on that $13,380 (about $1,000) will also be coded as a 2021 SIMPLE IRA contribution for a total of $14,380 of 2021 SIMPLE IRA contributions YTD.

Is that accurate? If it is accurate, then my client will have less room than anticipated for additional SIMPLE IRA employee contributions over the remainder of the year.



If your are referring to the custodian 5498 reporting, it does not matter because like a SEP IRA contribution, the custodians always report contributions for the year they are received. The tax return is where contributions are reported for the year intended. I am assuming client is self employed, not an employee receiving a W-2.



Client is the owner of a business and they have a SIMPLE IRA plan. They get some w2 income from the business. So could the CPA override what we report as custodian and just note that the $13,380 were the 2021 contributions from the January deposit that was recoded rather than $14,380 (deposit plus earnings)?



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