SECURE 2.0 Act –Section 317. Retroactive First-year Elective Deferrals for Sole Proprietors

SECURE 2.0  Act –Section 317. Retroactive First-year Elective Deferrals for Sole Proprietors

The SECURE 2.0 Act (SECURE 2.0), which was signed into law by President Biden on December 29, 2022, includes an expansion of the time a sole proprietor may establish a 401(k) plan.

A sole proprietor is an individual who owns the entire interest of an unincorporated business and is the only employee of that enterprise. Prior to these SECURE 2.0 changes, sole proprietors were required to adopt a 401(k) plan by December 31st of a given taxable year in order for a plan to be effective in that year.

SECURE 2.0 extends the deadline for a sole proprietor to adopt a 401(k) plan to the tax return filing date following the end of the year (without extensions). Thus, a calendar year sole proprietor will have until April 15 to decide to adopt a 401(k) plan and make contributions retroactive to the preceding year.

If you have any questions about SECURE 2.0, please contact a member of the Schneider Downs Retirement Solutions team at [email protected].

This article is part of a series highlighting the impact of the SECURE 2.0 on retirement plan sponsors, participants and retirees. You can view our full catalog of SECURE 2.0 articles here.

About SECURE 2.0

SECURE 2.0 was signed into law by President Biden on Dec. 29, 2022, as part of a $1.7 trillion omnibus spending bill.

This massive piece of legislation builds on the foundation that was laid by the 2019 Setting Every Community Up for Retirement Enhancement (SECURE) Act to further improve upon the success of the private employer-based retirement system by making it easier for businesses to offer retirement plans and for individuals to save for retirement.

The full text of SECURE 2.0, including provisions that affect pension and cash balance plans, may be found on pages 2,046-2,404 of the omnibus Consolidated Appropriations Act of 2023.

About Schneider Downs Retirement Solutions

Schneider Downs Retirement Solutions has experience in all facets of qualified and non-qualified plan delivery, which allows us to be flexible to the needs and direction of our clients. Our specialized team of advisers and consultants provide objective advice and expertise to help plan sponsors govern their retirement plans appropriately, mitigate risk, improve participant outcomes and support efficient and compliant plan operations. 

Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2023 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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SECURE 2.0 Act – Section 604. Optional Treatment of Employer Matching or Non-elective Contributions as Roth Contributions.
SECURE 2.0 Act – Section 101. Expanding Automatic Enrollment in Retirement Plans
SECURE 2.0 Act – Section 111. Application for Credit for Small Employer Pension Plan Startup Costs to Employers Which Join an Existing Plan
SECURE 2.0 Act – Section 126. Special Rules for Certain Distributions from Long-term Qualified Tuition Programs to Roth IRAs
SECURE 2.0 Act – Section 102. Modification of Credit for Small Employer Pension Start-Up Costs
SECURE 2.0 Act –Section 317. Retroactive First-year Elective Deferrals for Sole Proprietors
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