In Retirement News for Employers, October 2, 2014 Edition, the Internal Revenue Service (the “IRS”) reminds us that, if you own a business, you still have time to set up a Simplified Employee Pension (“SEP”) plan for 2013. Here is what the IRS says.
If you set up and fund your SEP by the due date of your 2013 business return (including extensions), you can still take a deduction for 2013. If your business uses the calendar year for its tax year, the deadline to set up and contribute to a SEP plan for 2013 depends on the type of your business organization:
• If your business is a corporation, filing Form 1120 or 1120S, you have until
March 15, 2014 (September 15, 2014, if you file for an extension).
• If your business is a partnership, filing Form 1065, you have until April 15, 2014 (September 15, 2014, if you file for an extension).
• If your business is a sole proprietorship, reported on Schedule C of Form 1040,
you have until April 15, 2014 (October 15, 2014, if you file for an extension).
You can set up a SEP plan for little or no cost at a bank, investment firm or insurance company.
SEP plans offer high contribution and deduction limits, minimal paperwork and no
annual Form 5500 filing. You can contribute to a SEP plan even if you participate in an unrelated employer’s plan (for example, a 401(k) plan). Contributions to a SEP plan are subject to the SEP contribution limits.
Other kinds of business-sponsored retirement plans must have been established before the end of 2013 in order for the business to get a deduction for 2013.