December 2024: document timing, payroll deferrals, and the funding that can wait

December is when owners try to collapse three different calendars into one wire transfer. The calendars will not collapse. A 2024 employee deferral has to come from 2024 payroll that has not yet been paid. A plan document has its own adoption rules, including a SECURE Act window that is later than December 31 and is still a bad reason to begin thinking now. A defined benefit contribution, including a cash balance contribution, is often funded next year, on dates your CPA and the enrolled actuary do not treat as interchangeable. If you remember only one thing from this briefing, remember that those are three decisions.

Sterling Pension Group LLC in West Hartford is a third-party administrator. We coordinate independent Enrolled Actuaries. We are not an actuarial firm, and we will not turn a December phone call into a certified contribution. This is education for a self-employed owner, a physician, a dentist, an attorney, or a consultant. It is not tax, legal, or actuarial advice. The neighboring notes are /insights/do-not-rush-funding and /insights/reading-2025-limits.

Clock one: payroll deferrals end when the last check is calculated

The 2024 deferral limit is $23,000. If you are age 50 or older in 2024, the catch-up is $7,500. There is no ages 60–63 catch-up in 2024. That higher tier, $11,250, begins in 2025, and it is not available on a bonus you pay this month even if you are 62. The 2025 ordinary deferral of $23,500 is also not available this month. IR-2024-285 made the 2025 table public on November 1. It did not make the table effective before January 1, 2025. The newsroom text is IR-2024-285. The full COLA history is on the IRS dollar limitations page.

Employee deferrals generally cannot be made retroactively. If the compensation has already been paid, or made available, without an election in place, that dollar is gone from the 2024 deferral. December 8 is late. It is not always too late. Monthly payroll that has not been submitted, a year-end bonus that has not been run, and a remaining biweekly check can still carry a deferral if the plan exists, or will exist in time for the election to be effective, and if payroll can actually implement the percentage or the dollar amount. Ask the payroll company for the submission deadline of the next check before you ask anyone for a plan document. A document signed after the check has been calculated does not pull the deferral backward.

Owners of S corporations are limited by the W-2 they actually run. A sole proprietor or partner does not create a deferral by moving money between personal accounts in December. Your CPA has to describe the only lawful way your entity executes an elective deferral. The cash balance plan cannot supply the deferral you forgot. The pair exists because the two pieces are different, which is the point of /insights/combo-plan and of the combo page.

Notice 2023-62 delayed the SECURE 2.0 Roth catch-up mandate through 2025. It is not in force this December, and it will not be in force for 2025 payrolls either. It is scheduled to operate beginning January 1, 2026, for participants whose prior-year FICA wages exceeded $150,000, and it will change the 401(k) catch-up, not the cash balance formula. Do not let a year-end bonus get coded as a mandatory Roth catch-up. The mandate is delayed.

Clock two: the document is late, and "later" is not the same as "never"

The SECURE Act generally allows a new qualified plan to be adopted by the due date of the employer's return, including extensions, and to be treated as adopted on the last day of the taxable year. For a calendar-year taxpayer that date is not December 31. It is the return deadline, extended if you extend. That rule is why a cash balance accrual for 2024 is sometimes still available to an owner who did not sign in the fall. It is also why people wait too long. "We can sign with the return" becomes "we will invent the plan when the return is due." Do not do that. The rule is an outer legal boundary, not a project plan.

What still has to be true, whenever you sign, is a census you can defend, a formula an enrolled actuary can value, and a compensation figure that respects the 2024 cap of $345,000. The 2025 cap of $350,000 does not apply to 2024. The defined benefit annual benefit limit for a 2024 accrual is $275,000, not the 2025 figure of $280,000. The defined contribution annual additions limit for 2024 is $69,000, not $70,000. The IRA limit for 2024 is $7,000, and it stays $7,000 in the 2025 announcement, which is a personal account rather than part of this document. The IRS explanation of the benefit ceiling is defined benefit plan benefit limits.

If staff exist, December is a poor month to discover them. Eligibility, a waiting period, and the hours people have already worked are facts. They are collected on the terms in /insights/census-first. A document that covers "owners only" because that was the slogan in a meeting will not survive a payroll register. Related employers belong in the same packet. If you will not assemble that packet, the honest December decision is to skip a 2024 pension and, if a deferral is still possible, use only the 401(k) you can actually run. Skipping can be the right professional result. The criteria are in /insights/not-a-fit and on the not a fit page.

Sterling can coordinate a document and an independent actuary when the facts are ready. We cannot sign Schedule SB. We cannot tell your payroll company, on December 23, to recreate checks that posted in October. If the facts are not ready, the work product you want this month is a list, not a signature.

Clock three: funding can usually wait, and a made-up deposit should wait forever

For a calendar-year defined benefit plan, the minimum funding contribution is generally due 8.5 months after year-end. That is September 15, 2025, for the 2024 plan year. Miss it, and the excise tax on Form 5330 can be 10% of the unpaid minimum. Put that date on the calendar. Do not "satisfy" it in December with a round number you chose because cash is in the operating account.

The deduction date is a second clock. IRC 404(a)(6) often allows a contribution to be deducted on the year's return if it is deposited by the due date of the return, including extensions. That date might be March, or September, or something else, depending on the entity and whether you extend. It is not automatically September 15. It is not automatically December 31. Your CPA has to name it. Owners get into trouble when a banker, or a well-meaning administrator, treats the minimum-funding date and the deduction date as one deadline and then picks a third date, "before year-end," because it feels tidy.

An illustrative cash balance credit is not a funding instruction. It is not an IRS cap. The $275,000 benefit limit is not a deposit. If the enrolled actuary has not produced a range for your census, you do not have a number to wire. If the actuary has produced a range, you still confirm with your CPA that a deposit of that size is deductible and that the business can pay the minimum again next year if the valuation requires it. Early funding is sometimes sensible. Invented funding is not. The week of Christmas makes invention feel urgent. It is not urgent. That argument is /insights/do-not-rush-funding.

Quarterly installments, where a plan is already in existence and the prior valuation says they apply, are a different matter. Follow the existing Schedule SB. Do not replace it with a December estimate because you are also thinking about a new plan. A new plan and an old plan can be in the same week and still not share a dollar figure.

What you can still finish, and what you should schedule instead

You can still finish a deferral election for a check that has not run, if the 401(k) is real and payroll agrees. You can still send the census, the entity chart, and the expected W-2 or earned-income figure to your CPA and to the actuary. You can still decide that 2024 is not the year, which is a complete decision. You can schedule a January meeting that uses 2025 limits for 2025 and leaves 2024 limits on the 2024 file.

You should not file a Form 5500 this month for a plan year that has not ended, and you should not file one for a plan that does not exist. When the 2024 year does end, a calendar-year Form 5500 will generally be due July 31, 2025, extendable to October 15, 2025 with Form 5558, filed on EFAST2. Beginning January 1, 2025, Form 5558 can be e-filed. That administrative change is not a December project. The IRS overview is the Form 5500 corner. The Department of Labor's filing page is Form 5500 reporting. The work that surrounds the filing is the plan lifecycle. The cost of doing it late, twice, is discussed on the fees page.

PBGC coverage, if anyone raises it as a reason to fund or not to fund this month, is plan-specific. Many small professional-service employers are exempt. All small plans are not exempt. Coverage does not change because December is busy. The agency's guidance is PBGC coverage. Counsel reads it against your entities. A funding wire does not answer it.

Publication 560 is still the right booklet if December has made the vocabulary slippery. A defined benefit plan, a cash balance plan included, is a promise. A 401(k) deferral is an election against pay. A deduction is a tax-return fact. When those three words start to mean "the amount I want to move before the holidays," stop and separate them again.

How 2025 limits should sit on the desk, unused

Write the 2025 column on a second sheet so it does not bleed onto the 2024 sheet. Deferral $23,500. Age-50 catch-up still $7,500. Ages 60–63 catch-up $11,250, first available in 2025. Annual additions $70,000. Compensation cap $350,000. Defined benefit limit $280,000. IRA still $7,000. Then draw a line and write "not for 2024 deferrals, not for the 2024 compensation cap, not for the 2024 benefit limit." The January briefing that puts this column into force will be /insights/limits-in-force. Using it early is how excess deferrals and overstated pension accruals are born in the last payroll of the year.

If you are setting 2025 owner compensation in a December board consent or a partnership discussion, you may look at the $350,000 cap as a 2025 fact. You may not pay 2024 wages above what 2024 can count and expect the plan to follow. Compensation design and plan design are the same conversation only when the year matches.

A practical December sequence

For the next two weeks, the sequence that respects the three clocks is short. Payroll first, because it expires. Census and CPA second, because the document is worthless without them. Actuary third, for an illustrative range rather than a wire. Funding last, and probably not in December at all.

Owners who already have a pair of plans should use December to reconcile, not to reinvent. Does the year-to-date deferral, plus what the last checks will take, stay inside $23,000 and the $7,500 catch-up if it applies? Does employer profit sharing, as your CPA classifies it, still sit in a sensible place next to the pension under the deduction coordination rules? Does the census on the valuation match the people you actually paid? Those reconciliations prevent a January surprise. They do not require a new contribution number.

Owners who have nothing in place should be honest about the deferral. If the last check cannot carry a meaningful election, say so and stop chasing $23,000. A pension discussion can continue into the new year under the adoption rule, with the understanding that 2024 deferrals are over. Starting that discussion from a clean census in January is better than signing a document this week that names the wrong employer.

What to do in the next two weeks

Separate the clocks on paper before you separate them with money.

• Email payroll today. Ask which 2024 checks are still open, what deferral those checks can still withhold, and which limit table is loaded. Require $23,000 and, if applicable, $7,500. Forbid $23,500 and $11,250 until 2025.
• Send your CPA the entity list, the expected 2024 compensation, and a one-line question: what is the deduction deadline for a 2024 pension contribution if we extend, and what is the minimum-funding date the actuary will use? The second answer, for a calendar year, should come back as September 15, 2025. If someone merges the two dates, correct them.
• If a 2024 cash balance accrual is still under consideration, send the census now and ask for an illustrative range under the $275,000 benefit limit. Do not fund the range.
• If the census is incomplete or the profit is not durable, decide to wait. Use the staff cost page and the comparison page to confirm that waiting is a plan, not a delay.
• Put Form 5500 and Form 5558 on a 2025 list. Do not draft them in December.

When the payroll answer and the CPA's two dates are in writing, contact Sterling Pension Group if you want the document work coordinated. If those two answers are not in writing, do not contact anyone for a funding number. December still has room for a clean decision. It does not have room for a blended one.