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If your business doesn\u2019t already have a retirement plan, now might be a good time to take the plunge. Current retirement plan rules allow for significant tax-deductible contributions.<\/p>\n
For example, if you\u2019re self-employed and set up a SEP-IRA, you can contribute up to 20% of your self-employment earnings, with a maximum contribution of $61,000 for 2022. If you\u2019re employed by your own corporation, up to 25% of your salary can be contributed to your account, with a maximum contribution of $61,000. If you\u2019re in the 32% federal income tax bracket, making a maximum contribution could cut what you owe Uncle Sam for 2022 by a whopping $19,520 (32% times $61,000).\u00a0<\/p>\n
More options<\/strong><\/p>\n Other small business retirement plan options include:<\/p>\n Depending on your circumstances, these other types of plans may allow bigger deductible contributions.<\/p>\n Deadlines to establish and contribute<\/strong><\/p>\n Thanks to a change made by the 2019 SECURE Act, tax-favored qualified employee retirement plans, except for SIMPLE-IRA plans, can now be adopted by the due date (including any extension) of the employer\u2019s federal income tax return for the adoption year. The plan can then receive deductible employer contributions that are made by the due date (including any extension), and the employer can deduct those contributions on the return for the adoption year.<\/p>\n Important:<\/em> The SECURE Act provision didn\u2019t change the deadline to establish a SIMPLE-IRA plan. It remains October\u00a01 of the year for which the plan is to take effect. Also, the SECURE Act change doesn\u2019t override rules that require certain plan provisions to be in effect during the plan year, such as the provisions that cover employee elective deferral contributions (salary-reduction contributions) under a 401(k) plan. The plan must be in existence before such employee elective deferral contributions can be made.<\/p>\n For example, the deadline for the 2021 tax year for setting up a SEP-IRA for a sole proprietorship business that uses the calendar year for tax purposes is October\u00a017, 2022, if you extend your 2021 tax return. The deadline for making the contribution for the 2021 tax year is also October\u00a017, 2022. However, to make a SIMPLE-IRA contribution for the 2021 tax year, you must have set up the plan by October\u00a01, 2021. So, it\u2019s too late to set up a plan for last year.<\/p>\n While you can delay until next year establishing a tax-favored retirement plan for this year (except for a SIMPLE-IRA plan), why wait? Get it done this year as part of your tax planning and start saving for retirement. We can provide more information on small business retirement plan alternatives. Be aware that, if your business has employees, you may have to make contributions for them, too.<\/p>\n \u00a9 2022<\/em><\/p>\n <\/body> If your business doesn\u2019t already have a retirement plan, now might be a good time to take the plunge. Current retirement plan rules allow for significant tax-deductible contributions. For example, if you\u2019re self-employed and set up a SEP-IRA, you can contribute up to 20% of your self-employment earnings, with a maximum contribution of $61,000 for […]<\/p>\n","protected":false},"author":1,"featured_media":131,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"pagelayer_contact_templates":[],"_pagelayer_content":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-132","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/posts\/132","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/comments?post=132"}],"version-history":[{"count":1,"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/posts\/132\/revisions"}],"predecessor-version":[{"id":133,"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/posts\/132\/revisions\/133"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/media\/131"}],"wp:attachment":[{"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/media?parent=132"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/categories?post=132"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ift.tax\/blog\/wp-json\/wp\/v2\/tags?post=132"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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