New SEP timing

[SumDay]

We get to set up a Simplified Employee Plan (SEP) for DH this year. He had a really good year with his consulting business aka we owe Uncle Sam bunches.

I'm guessing our tax guy will give us the final numbers on April 15th (this is the last year I'm using him - very long, complicated story) so here's my question.

We don't have a SEP established with Vanguard, but we do have accounts there. From what I read on the IRS site:

You can set up a SEP for a year as late as the due date (including extensions) of your business income tax return for the year you want to establish the plan.

I take this to mean that I can POSTMARK the application and check on April 15th and still be OK? Just wanted to run this by someone else before I ASSume too much.

Thanks in advance.

 

[UtahSkier]

To be somewhat safe, I would create the account now and fund the account when you can.

 

[Animorph]

I liked the Solo/Individual 401k better, but I set it up too long ago to compare it with a SEP. Mostly I was able to put more in it, I believe. I think the 401k had to be set up in the calendar year of the contributions, so SEP may work better for you just for that reason.

 

[samclem]

I liked the Solo/Individual 401k better, but I set it up too long ago to compare it with a SEP. Mostly I was able to put more in it, I believe. I think the 401k had to be set up in the calendar year of the contributions, so SEP may work better for you just for that reason.

I agree with all of this. The Solo 401K will let you contribute much more than a SEP IRA, if that is important to you. But, it's too late to set up a Solo 401K for 2012, so a SEP might be the best you can do for that income. You could set up a Solo 401K right now and start contributing for 2013 if you'd like.