SECURE Act and individual 401k establishment deadlines
SECURE Act extended the deadline for establishing retirement plans to the tax filing date, including extensions.
Client, files a Schedule C wants to establish a Solo 401k plan for tax year 2020 and contribute their employer and employee
share now.
Normally the employee share could not be done since year ended but because plan is an Individual 401k plan (no employees other than owner) the employee portion I believe could be done if an existing 401k plan.
Question 1 – Can they open Individual 401k now for tax year 2021 and contribute employer and employee portion
Question 2 – Client has existing SEP-IRA which they had made contributions to in 2019 and prior. Does this plan, since presumably it is still active preclude him from opening the Individual 401k ?
Thanks as always
Howard
Permalink Submitted by Alan - IRA critic on Fri, 2021-04-09 15:31
No, just the employer contribution. The employee contribution must still be elected no later than 12/31/2020 and Secure did not change that requirement.
No. The solo K can still be established to replace the SEP IRA for current year contributions.