If you or your spouse had any self-employment income in 2004, you can use a simplified employee pension (SEP) plan for a 2004 deduction. What’s more, you can establish and make deductible contributions to a SEP any time until the due date of your 2004 tax return, including extensions. The calculation can be complicated but contribution limits are roughly 20 percent of self-employment income, up to $41,000 in 2004.
Suppose, for example, your spouse had self-employment income of $30,000 in 2004. He has no retirement plan to shelter that income.
This year, he can open a SEP with a financial firm and make a deductible contribution up to $6,000, for 2004. If he’s not ready to act by April 15, you can extend your joint tax return’s due date to August 15 and then to October 17. Then your spouse can wait as late as October 17 to establish a SEP for 2004.
