Unfortunately, it is too late to set up a SIMPLE IRA for 2017. But you can contribute to your SEP IRA and a traditional IRA. You can contribute $6,500 to a traditional IRA. With a $3,000 SEP contribution, you are up to $9,500 for 2017.
Even if you already had a SIMPLE IRA set up, you have to make that decision before Jan. 30. Your sole proprietor salary reduction contribution for yourself must be deposited to your SIMPLE IRA no later than Jan 30.
Click here for more information: SIMPLE IRA Tips for the Sole
Proprietor.
The government places no restrictions on contributing to both a SEP IRA and aTraditional IRA in the same year so you do not need to reduce your SEP IRA contribution to also contribute to a Traditional IRA.
Employee contributions are deducted from their wages, so you have to report that on your Quarter 4, 2017 Form 941 and W-2 both of which are due Jan 31. The employee contributions must be deposited by that time.
Below is an excerpt from the IRS guidance SIMPLE IRA Plan FAQs - Establishing a
SIMPLE IRA Plan.
"You can set up a SIMPLE IRA plan effective on any date between January 1 and October 1, provided you (or any predecessor employer) didn’t previously maintain a SIMPLE IRA plan. If you’re a new employer that came into existence after October 1 of the year, you can establish the SIMPLE IRA plan as soon as administratively feasible after your business came into existence."
"Generally, you can’t contribute to a SIMPLE IRA plan for a calendar year if you maintain another retirement plan and any of your employees receives an allocation or accrues a benefit under the other plan during that calendar year (the “one-plan requirement”)."
You have more time for a SEP IRA: A SEP-IRA can be opened and contributions made until the employer's actual tax-filing deadline, including any extensions. When should I establish and fund my SEP-IRA plan? Plans must be established by the tax-filing deadline of the business (generally April 15, plus extensions) in order to contribute for that tax year.
