The SECURE Act

A Boon for Business Owners

On December 20, 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law. The legislation enacted many significant changes to the retirement landscape, which offer a great boon to business owners. Specifically, the SECURE Act extended the deadline for business owners to adopt a new traditional 401(k) plan to the due date of that year’s tax return, including extensions.

A Break from the Old

In the past, business owner’s faced many uncertainties when establishing a 401(k) plan due to unfortunate timing. Business owners wanted to close the year strong and understand their tax liability, then discuss opening a 401(k) plan to reduce that tax burden. However, the 401(k) had to be established before the end of the calendar year, so business owners were being asked to commit to the plan before they were ready.

A Tax "Do Over"​

Enter the SECURE Act. Now, for the first time, business owner’s can choose to establish a 401(k) up to the due date of that year’s tax return, including extensions! This means that a business owner can now establish a 401(k) with the full knowledge of their current cash position and their pending tax liability! In this way, it’s possible to know the exact benefit the 401(k) will have on their taxes, giving business owners the benefit of a tax “Do Over”.
 
Said differently, you can now get your tax bill and say, “I’d like it to be less. Let’s take action.”