This Web site contains a compilation of more than a thousand consumer finance
columns written by Tony Novak from the 1980s through 2006, updated and reformatted for
maximum usefulness today. New material was added after
2010.
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412(i) pension plan setup deadline
originally posted: 10/29/2005
revised: 11/23/2010
Q: I want to start a one person pension plan to make a large tax deduction for 2006. Does this plan need to be established before the end of the year?
A: No. Actually this type of pension, in contrast to
other more common retirement plans, has no specific requirement for a
written plan document (although some businesses do use a written plan
document in the current tax year) during the tax year. The funding
deadline is the tax return due date of the business (usually March 15 or
April 15, depending on the type of business). Since you have time at
this point, it makes sense to at least set up the framework of the plan
during this calendar year to be sure that all the related issues are in
order.
One advantage of 412(i) pension plans is that they
can be set up retroactively after the end of the tax year.
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