That plan would be a SEP, the acronym for Simplified Employee Pension, an IRA-based retirement plan. Unlike a “qualified” retirement plan (401[k}, profit-sharing, or defined benefit) which must be in place no later than the last day of the year, a SEP is subject to a different rule.
Generally, a SEP can be set as late as the due date (including extensions) of the taxpayer’s income tax return for the tax year.
That means he or she may be able to establish a SEP for the 2019 tax year in 2020 before the due date including extensions.
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