Can You Make a 2025 Retirement Contribution in 2026? What Business Owners Need to Know About Retroactive Funding Rules
Retirement plans are built with enough flexibility to accommodate different types of earners and business structures. That flexibility extends to how contributions are made, the limits that apply and the deadlines you must follow. The rules for when you can fund a retirement plan vary significantly based on the type of account you use and the way your business is organized.
Some types allow contributions up to the business’s tax filing deadline. Others lock in deadlines tied to payroll cycles or year-end elections. Understanding your retirement plan, and how to make the best use of its contribution flexibility, can pay dividends for not just this tax year but future years.
SEP IRA Contributions Through the Filing Deadline
SEP IRAs remain one of the simplest options for business owners because the contribution window is flexible. For example, a 2025 contribution can be funded in 2026 as long as it’s made before your business filing deadline. The same rule applies each year: SEP IRA contributions follow the tax-filing calendar, including extensions.
A sole proprietor filing on a traditional April schedule may have until mid-October 2026 to fund the prior year’s SEP contribution. S corporations and partnerships follow their entity deadlines, and the extension period applies there too. This flexibility is useful for owners who want to close the books, finalize taxable income and then calculate the optimal SEP contribution.
Staff inclusion matters because SEP contributions must be made for eligible employees if you make one for yourself. That requirement also follows the retroactive window, so the business must fund employee contributions by the extended deadline as well.
Solo 401(k) Contributions Split Between Employee and Employer Timing
Solo 401(k) plans offer strong contribution limits, but their deadlines are more nuanced. Contributions fall into two categories, and each has its own rules.
Employee deferrals must be elected by December 31 of the plan year for most businesses. The contribution itself may be deposited later, but the election has to occur before the year's end. A limited exception exists for sole proprietors in their first year of establishing a Solo 401(k), who may be allowed to make a retroactive deferral election by their personal tax filing deadline.
This split can cause confusion for some business owners. Employer contributions often remain available until the fall of the following year, while employee deferrals are tied directly to December 31.
SIMPLE IRA Contributions Must Follow Payroll Timing
SIMPLE IRA plans follow payroll more strictly than SEP IRAs or Solo 401(k)s. Employee deferrals must be taken through payroll during the year in which the contribution applies. Employer matching and nonelective contributions may be deposited up to the business’s tax return deadline, including extensions, even though they must be based on the prior year’s compensation.
If payroll for the year is complete, you cannot retroactively designate additional SIMPLE IRA contributions for the prior year.
Catch-up contributions for eligible employees, including the owner, work the same way. They must flow through payroll, not a late lump sum in the following year. This structure is the biggest difference between SIMPLE plans and other small business retirement plans. SIMPLE IRAs are designed to sync with payroll withholding rather than retroactive funding based on a closing of the books.
Owners planning to maximize SIMPLE IRA contributions must confirm deferral percentages before the final payroll cycle in December. If end-of-year cash flow changes affect how much you want to save, you need to adjust the deferral rate in time for the last payroll run.
Traditional and Roth IRA Contributions Through the Filing Deadline
Traditional and Roth IRA contribution rules are more straightforward. Individuals can make contributions for the prior year up to the personal tax filing deadline. No extension is required to allow this. Contributions for 2025 can be made any time up to the April 2026 deadline, even if the taxpayer files early.
These contributions also apply to business owners who contribute outside of an employer plan. Many owners determine their IRA eligibility only after reviewing final income, which is why this post-year-end window can be especially helpful for owners on the cusp of Roth IRA income limits.
Traditional IRA deductibility depends on income, filing status and participation in an employer plan. Making these contributions after final income is known often leads to cleaner planning decisions and avoids backtracking if estimates change.
Choosing the Right Funding Timeline for Your Situation
Business owners working across multiple retirement plans may want to work out a combined contribution timeline. Talk with your accountant or financial planner to find out if something like this would work for you:
- SIMPLE IRA or Solo 401(k) deferrals run through payroll until December 31
- Plan is evaluated before year-end to determine whether a salary increase, bonus payroll or final deferral adjustment is needed
- After the books close, SEP or employer Solo 401(k) contributions are calculated
- Owner waits until filing season to finalize the exact amount based on taxable income
- IRA contributions fill the final gap between available cash and overall savings goals
Learn How to Maximize Your Retirement Contributions While Maintaining Compliance With All Relevant Arizona and Federal Laws
Managing multiple contribution windows while tracking payroll deadlines, plan rules and year-end adjustments can be difficult for business owners. H&H Accounting Services helps owners coordinate their retirement plan deadlines, determine contribution amounts and align retroactive funding with cash flow and tax goals.
Contact us online or give us a call at (480) 561-5805 if you want support building a clear retirement contribution timeline that fits your business.
