With the year-end fast approaching, you need to be aware of certain deadlines. One important one and one that is very often misunderstood has to do with the date by which a SIMPLE IRA Plan must be established.
Per the IRS FAQs: “You can set up a SIMPLE IRA plan effective on any date between January 1 and October 1, provided you (or any predecessor employer) didn’t previously maintain a SIMPLE IRA plan. If you’re a new employer that came into existence after October 1 of the year, you can establish the SIMPLE IRA plan as soon as administratively feasible after your business came into existence. If you previously created a SIMPLE IRA plan, you must set up a new one effective on January 1.
With October 1 right around the corner, anyone wanting to establish a SIMPLE IRA Plan should seek their legal and tax counsel immediately.
If you want to create a new SEP IRA Plan, you have additional time. The deadline for establishing new plans is the due date of the business tax return plus extensions. For a calendar year business, the date would be October 15 of the year following the business tax year.