It’s Not Too Late: Employers Can Still Set Up Retirement Plans and Unlock Significant Tax Savings for 2025
Many business owners assume that once tax season passes, the opportunity to reduce last year’s tax bill is gone.
That’s often not the case.
If you filed a tax extension, you still may have time to establish and fund a retirement plan for the prior year and generate meaningful tax deductions.
The Missed Opportunity Many Employers Don’t Realize
Retirement plans are one of the most powerful tax planning tools available to business owners. Plans can allow for substantial deductible contributions, often far exceeding what’s possible through IRAs or basic 401k plans alone. However, many employers assume these plans must be set up by December 31 in order to count toward the prior tax year. In reality, provisions like SECURE and SECURE 2.0 have made the rules more flexible in recent years, especially when a tax extension is involved.
If you filed an extension, you didn’t just delay paperwork: you extended your retirement planning window. For many business entities, including S corporations and partnerships, the extended filing deadline is September 15.
That matters because retirement plan contributions can generally be made up until the extended tax filing deadline. In many cases, certain plans can also be established during this extended period and still apply to the prior tax year. For calendar-year businesses, this often creates a final funding window that runs through September 15.
Important (and often misunderstood):
Even if you file your extended tax return early (in, say, May), you may still have until September 15 to establish and fund a retirement plan, provided you file an amended return with the new plan details.
This creates a unique opportunity to revisit your tax situation with full clarity, add a retirement plan after the fact, and capture deductions you didn’t plan for during the initial filing.
With rising incomes and evolving tax policy, proactive planning matters more than ever in the current 2025 / 2026 tax years. Filing an extension is no longer just about buying time; it’s about creating space for better decisions. As many advisors now position it, an extension can serve as a strategic pause that allows for more thoughtful tax planning rather than rushed compliance.
For business owners, that often means evaluating whether income was higher than expected, identifying missed deduction opportunities, and implementing a retirement plan that aligns with long-term goals
Additional Flexibility for Sole Proprietors
Under SECURE 2.0, certain sole proprietors have even more flexibility.
If a sole proprietor files a tax extension, they may be able to establish a new 401(k) plan as late as October 15 and still make employee deferral contributions for the prior year.
This creates a unique, last-minute planning opportunity that wasn’t previously available, but proper setup and timing are critical to ensure compliance.
What Types of Plans Still Work After the Deadline?
Not all plans are created equal when it comes to timing. But several options may still be viable after the initial tax deadline, particularly with an extension:
- SEP IRA – Often the simplest option, with flexibility on timing
- Profit-Sharing Plans – Can allow for significant discretionary contributions
- Cash Balance Plans – Ideal for higher-income owners looking for larger deductions
Each comes with specific rules, deadlines, and design considerations, so proper structuring and working with a plan consultant who can help tailor the right plan(s) for you is critical.
The real opportunity isn’t just that these plans can still be implemented—it’s that they can be implemented strategically. When you wait until after April 15, you’re working with finalized (or near-finalized) numbers, which means you can design contributions with precision and avoid guesswork, reducing the risk of over- or under-contributing.
Don’t Let the Window Close
For many businesses, the period between April and September is an overlooked planning window. Once that extended deadline passes, the opportunity to impact the prior year is gone. If you filed an extension, you may still have time—but not much.
Retirement plans are not just compliance tools—they are one of the most effective ways to reduce taxes and build long-term wealth. But timing and design matter.
Working with an experienced plan consultant, such as Primark Benefits, one who understands contribution deadlines, extension rules, and advanced plan design strategies, can help ensure you don’t miss opportunities that are still very much on the table.
