How does the IRS’s tax filing deadline extension now help another deadline?
The SECURE Act’s modified deadline for opening a Defined Benefit plan just got sweeter – with a boost from this year’s IRS tax filing deadline extension. As a reminder, the deadline for a business to establish a plan previously had been extended to a business’s tax filing due date (including extensions). Therefore high income, self-employed professionals now have even more time to open a Defined Benefit or Cash Balance plan for the 2020 tax year.
Great news for Sole Props! Here’s a client example that illustrates why…
A financial planner that is a sole proprietorship wants to create a new Defined Benefit plan. The company’s fiscal year ended December 31st and its tax return deadline for the 2020 tax year is May 17th (adjusted for the IRS’s tax filing deadline extension).
Because of the SECURE Act’s provision, this year the small business can adopt the plan by May 17th for the 2020 plan year. Also the business can set up a solo 401(k), to maximize contributions.
Need help identifying the right candidate for a Defined Benefit plan? Feel free to ask me or any of our Plan Design Consultants. We’re happy to help and easy to talk to. Thanks.