Employers can still establish a retirement plan for 2020. Historically, plans had to be established by year-end. 2020 is the first plan year where a Profit Sharing or Defined Benefit/Cash Balance Plan can be established until an employer’s tax filing deadline including extensions. This allows employers time to review their actual 2020 financials with their advisor & tax counsel before deciding if a new retirement plan is appropriate.
Funding deadlines still follow employer tax filing deadlines including extensions; however, DB/Cash Balance must be funded by 9/15. While 401(k) deferrals aren’t allowed retroactively, they can be included for the 2021 plan year moving forward. This law change was a result of the SECURE Act, which you can learn more about by viewing a SECURE Act Overview from our friends at Nicholas Pension Consultants.
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Feel free to contact me with any questions regarding establishing plans for 2020.