Timing is Everything for Small Biz Retirement Plans for 2021

13th Apr 2022

forbes article with red megaphone

Key Takeaways

  • The filing deadline to submit 2021 tax returns or an extension is April 18, 2022.
  • Tax experts recommend filing for a tax extension for 2021 to allow tax planners more time to prepare for tax filings.
  • You can still open and fund a SEP-IRA for 2021 and can open a SEP-IRA plan as late as your tax-filing deadline, including extensions.
  • You can set up your solo 401(k) after December 31, 2021, and still make 2021 employer contributions.
  • The deadline to establish a Cash Balance plan has been extended to the tax-filing deadline, including extensions.

Tax season is now in full swing and for most taxpayers the filing deadline to submit 2021 tax returns or an extension is April 18, 2022. While tax season can be perplexing for everyone, it may be more complicated for small business owners, independent contractors and entrepreneurs who face rules and regulations that are constantly changing. In the recent Forbes article, Can You Still Open A Small Business Retirement Plan For 2021?, Certified Financial Planner David Rae breaks down the advantages and disadvantages of three retirement plans and the deadlines to establish plans: SEP-IRAs, solo 401(k) plans, and Cash Balance plans.
 
The pandemic continued to upend small businesses in 2021, but many earned record profits that have led to big tax bills. Some retirement plans are designed to help small business owners lower their taxes — there may be time to open a new retirement plan for your business for 2021. Under the SECURE Act, small business owners now have extra time to establish a 401(k) plan for the prior tax year.
 
Tax experts recommend filing for a tax extension for 2021 to allow tax planners more time to prepare for tax filings. A tax extension gives you six more months to file your tax return.
 
“We file an extension for every single client, although they should pay estimated taxes throughout the year,” Scott Orn, chief operating officer of Kruze Consulting, told USA Today.

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