What is considered "by the deadline" for tax deductibility of contributions?

When is a contribution considered to be made "by the tax filing deadline?" in regards to being deductible for that plan year?  We have a client who waited until the last day to file their taxes - and to submit their annual employer match on that same afternoon. The submission missed the record-keeper's daily cut-off for the ACH pull, so funds were not pulled from the employer bank account until the next day - the day after their tax filing deadline. The funds were deposited to the plan's trust the following day. 

Is the contribution considered "made" when the transaction is submitted online? Or when the ACH actually pulls? Or when the assets are actually deposited to the trust? 

Thank you for any assistance!

They made it in time. Unrestricted submission is all that is required.  It is not required that the funds hit the account by the due date.

Thank you, Larry!

I keep this handy and have emailed is many times:

SEC. 7502. TIMELY MAILING TREATED AS TIMELY FILING AND PAYING.

7502(a) GENERAL RULE . –

7502(a)(1) DATE OF DELIVERY . --If any return, claim, statement, or other document required to be filed, or any payment required to be made, within a prescribed period or on or before a prescribed date under authority of any provision of the internal revenue laws is, after such period or such date, delivered by United States mail to the agency, officer, or office with which such return, claim, statement, or other document is required to be filed, or to which such payment is required to be made, the date of the United States postmark stamped on the cover in which such return, claim, statement, or other document, or payment, is mailed shall be deemed to be the date of delivery or the date of payment, as the case may be.

7502(a)(2) MAILING REQUIREMENTS . --This subsection shall apply only if --

7502(a)(2)(A) the postmark date falls within the prescribed period or on or before the prescribed date --

7502(a)(2)(A)(i) for the filing (including any extension granted for such filing) of the return, claim, statement, or other document, or

7502(a)(2)(A)(ii) for making the payment (including any extension granted for making such payment), and

7502(a)(2)(B) the return, claim, statement, or other document, or payment was, within the time prescribed in subparagraph (A), deposited in the mail in the United States in an envelope or other appropriate wrapper, postage prepaid, properly addressed to the agency, officer, or office with which the return, claim, statement, or other document is required to be filed, or to which such payment is required to be made.

7502(b) POSTMARKS . --This section shall apply in the case of postmarks not made by the United States Postal Service only if and to the extent provided by regulations prescribed by the Secretary.

Gosh I’m such a nerd…

Ok the mailbox rule under 7502 applies to filings and payments to the gov’t. (and tenuously to plans via private letter ruling, can anyone find a better cite than PLR 8536085?There is a reference in 310.7802A-1 that includes qualified plan deposits. But that doesn’t mandate including a mailbox rule for plan payments to institutions.)In any event these are all “mailings”.

There is no “electronic mailbox rule”. https://taxpayeradvocate.irs.gov/Media/Default/Documents/2017-ARC/ARC17_Volume1_LR_02_EmailRule.pdf

The essence of the mailbox rule is that once you put it in the mailbox, it’s absolutely positively going to go where you mailed it.You can’t by law stick your hand in the mailbox and change your mind.

A payfile setup for ACH pull is not the same.Once the employer hits “submit”, he could immediately change his mind and undo his act.That is the precise opposite of the sense of the mailbox rule.

If the mailbox rule fails, then the "actual receipt" rule applies.

So IMHO, the contribution was late.

Larry's got my vote.

(any citation or because he's prettier than me?)

Definitely because he's prettier.

On 9/17/2018 at 11:34 PM, QP_Guy said:

Gosh I’m such a nerd…

Ok the mailbox rule under 7502 applies to filings and payments to the gov’t. (and tenuously to plans via private letter ruling, can anyone find a better cite than PLR 8536085?There is a reference in 310.7802A-1 that includes qualified plan deposits. But that doesn’t mandate including a mailbox rule for plan payments to institutions.)In any event these are all “mailings”.

There is no “electronic mailbox rule”. https://taxpayeradvocate.irs.gov/Media/Default/Documents/2017-ARC/ARC17_Volume1_LR_02_EmailRule.pdf

The essence of the mailbox rule is that once you put it in the mailbox, it’s absolutely positively going to go where you mailed it.You can’t by law stick your hand in the mailbox and change your mind.

A payfile setup for ACH pull is not the same.Once the employer hits “submit”, he could immediately change his mind and undo his act.That is the precise opposite of the sense of the mailbox rule.

If the mailbox rule fails, then the "actual receipt" rule applies.

So IMHO, the contribution was late.

We discussed this issue with the powers at IRS a number of times when I was handling the IRS Q&As for the ASPPA annual.  They were unanimous that submitting electronic payment was acceptable for them. Remember, these are NOT payments to IRS or submission of documents or forms to IRS. They saw this as different.

Therefore, TAKE THE DEDUCTION and don't worry about it.  IRS will not challenge it.