Year-End Planing for your Small Business Retirement Plan

It’s already mid-October and the end of the year will be upon us before we know it. Entrepreneurs and small business owners should be considering if any planning opportunities exist to help them defer taxes and save for retirement.

Dates and deadlines for establishing and contributing to a workplace retirement plan vary considerably depending on the plan chosen. If your business does not already have a retirement plan, your options this late in the year are limited.  SIMPLE-IRA plans must be established before October 1st, so it is too late to establish a SIMPLE plan for 2013. 401(k) plans must be established before the end of the company’s tax year (typically, but not always, December 31st).  Many business owners will find that establishing a group 401(k) plan is a lengthy process and it may be difficult to establish a plan in the next 60 or so days before the end of the year.

Sole proprietors will find that they have more flexible options.  Individual 401(k) plans (aka Solo 401(k)s) must also be established by the end of the company’s corporate tax year (often December 31st), but the setup process is much simpler than a group plan, and getting a plan established in a few months is typically not a problem. SEP-IRAs can be established until an individual’s tax filing deadline (typically April 15th) and contributions can be made up to the same date.

Business owners considering changes to their existing retirement plans or who may want to establish a new plan need to shift into high gear and evaluate what options are still available to them late in the year before the clock runs out.


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