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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

Content is the opinion of the author and does not represent the position of any other person or entity. Information is from sources believed to be reliable but cannot be guaranteed.

The author is paid for product endorsements and has an ownership or other financial interest in the businesses related to the topics covered.

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412(i) pension plan setup deadline

originally posted: 10/29/2005  revised: 11/23/2010

Q: I want to start a one person pension plan to make a large tax deduction for 2006. Does this plan need to be established before the end of the year?

A: No. Actually this type of pension, in contrast to other more common retirement plans, has no specific requirement for a written plan document (although some businesses do use a written plan document in the current tax year) during the tax year. The funding deadline is the tax return due date of the business (usually March 15 or April 15, depending on the type of business). Since you have time at this point, it makes sense to at least set up the framework of the plan during this calendar year to be sure that all the related issues are in order. 

One advantage of 412(i) pension plans is that they can be set up retroactively after the end of the tax year.

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