Tuesday Thoughts, 9/4/2018

Ah, procrastination. We all do it. Even with the best of intentions, we’ll say, “OK, I’m going to do that now. Just let me do this other thing first.” And sometimes it works: we procrastinate on a project we thought we had to do, only to find out later that maybe we didn’t need to do it at all. But procrastination is not a strategy. It’s not the same as taking the time needed to analyze, it’s just putting things off. And that can cost us, in terms of productivity or missed opportunity.

So, OK, your client has been procrastinating about putting in a retirement plan. They know they have until 12/31/18 to put one in for this year. But what if they want a safe harbor 401(k)?

A safe harbor 401(k) plan is often the best option for a small firm. The owner wants to contribute $24,500, but the employees only want to contribute between 3% and 5%. The plan won’t pass nondiscrimination testing. On top of that, the plan may be Top-Heavy. The safe harbor match can satisfy the Top-Heavy minimum contribution.

But your client cannot adopt a safe harbor 401(k) this December. The latest date to adopt a safe harbor 401(k) for 2018 is October 1, 2018. So maybe the right time to talk about a retirement plan isn’t in a minute, it’s right now.