If you operate a small business, you may be able to fund a retirement plan for you and your eligible employees, and get a tax write off for the amount. Your options include qualified plans, SEP IRAs and SIMPLE IRAs. If you missed the October 1 deadline to set up a SIMPLE IRA for last year, or the December 31
deadline to set up a qualified plan for last year, you can still fund a retirement plan for last year by setting up a SEP IRA. SEP IRAs can be established and funded as late the tax filing deadline, plus extensions, for the business owner. This means that you can set up and fund your SEP IRA ( for last year) as late as April 15, or later if you have an extension to file your federal tax return.
Many small business owners find SEP IRAs attractive because they are easy to establish and maintain, and can be easily communicated to employees.
The limit is the lesser of 25% of income or $49,000. The 25% is reduced to 20% of modified net profit for Schedule-C filers . The $49,000 is the dollar limit for 2010 and 2011- click here for current limits.
The December 31 deadline applies to qualified plans that are operated on a calendar year basis.
Tip provided byAppleby Retirement Consulting Inc. Appleby Retirement Consulting Inc provides Consulting, Coaching and Content on IRAs and other retirement plans to Financial, Tax and Legal professionals.