SIMPLE IRA vs. SEP IRA Before Year-End in Atlanta

If you are trying to establish a retirement plan for 2026, timing matters. A new SIMPLE IRA generally must be established by October 1, 2026 to be effective for this year, while a SEP IRA can generally be established and funded as late as your business tax-return due date, including extensions. For 2026, the SIMPLE IRA employee deferral limit is $17,000, while SEP contributions can be as much as the lesser of 25% of compensation or $72,000; the better fit depends largely on whether you have employees, how much you want to save, and how much administration your business can support.

For many Atlanta owners, November brings an urgent question: “Can I still do something for this tax year?” The answer may be yes—but the right plan is not always the one with the biggest contribution limit. It needs to work for your income, employees, cash flow, and long-term goals.

First: What Can Still Be Set Up for 2026?

If you are reading this after October 1, a brand-new SIMPLE IRA usually cannot be made effective for 2026. The principal exception is a new employer that came into existence after October 1 and establishes the plan as soon as administratively feasible. For an existing business, that means SIMPLE IRA planning after October 1 is generally about preparing for the next calendar year.

A SEP IRA is more flexible on timing. A business can generally establish a SEP for 2026 up to the due date of its 2026 tax return, including extensions. That makes it a practical option for a sole proprietor or small business owner who wants time to understand year-end profit before finalizing a contribution.

Do not confuse “can still be opened” with “should be opened automatically.” Retirement-plan deadlines, compensation calculations, employee eligibility, and tax treatment are important details. Some1 Family Office, Jay Thurlow, and Kinetic Pathways can help Atlanta-area owners frame the questions early enough to make a thoughtful decision.

Option 1: SIMPLE IRA

A SIMPLE IRA is often a good fit for a small business with employees that wants an accessible retirement benefit without the administration of a traditional 401(k). It is available to employers with 100 or fewer employees who received at least $5,000 in compensation during the prior calendar year, assuming other eligibility requirements are met.

Employees can make salary-deferral contributions. For 2026, the basic employee deferral limit is $17,000. Employees age 50 or older may be eligible for an additional catch-up contribution of $4,000, and a higher catch-up of $5,250 applies for eligible participants who turn ages 60 through 63 during 2026.

The employer must also contribute, generally through either a matching contribution of up to 3% of compensation or a 2% nonelective contribution for eligible employees. That required employer contribution is an important budgeting consideration. A SIMPLE IRA can be straightforward and employee-friendly, but it is not a no-cost retirement plan for the employer.

Option 2: SEP IRA

A SEP IRA is often attractive for self-employed professionals, solo practitioners, and owner-only businesses because it is simple to establish and can allow larger employer contributions. For 2026, contributions are limited to the lesser of 25% of compensation or $72,000.

Unlike a SIMPLE IRA or 401(k), a SEP IRA does not allow employee salary deferrals. Contributions are employer contributions. For a sole proprietor, the calculation is more specialized than simply taking 25% of net profit, so it is wise to coordinate with a tax professional.

The main caution for businesses with employees is fairness: if eligible employees participate, the employer generally contributes the same percentage of compensation for them as for the owner. A SEP that looks ideal for a solo Sandy Springs consultant can become more expensive for an Atlanta business with a growing staff.

Option 3: A 401(k) Plan

A 401(k) is more flexible and potentially more powerful, particularly for businesses that want employee deferrals, employer matching or profit-sharing, and a more robust long-term benefits strategy. In 2026, the basic employee elective-deferral limit is $24,500, plus an $8,000 catch-up contribution for many participants age 50 and older. The overall defined-contribution limit, combining eligible employee and employer contributions, is $72,000 before applicable catch-up contributions.

A 401(k) can be a strong choice for businesses with a larger or more stable team, but it usually involves more design decisions, administration, and compliance than a SIMPLE or SEP IRA. Establishment timing can also differ depending on the business and plan design. If this is a year-end priority, do not wait until the last week of December to ask what is possible.

Option 4: A Cash Balance Plan

A cash balance plan is a type of defined benefit pension plan. It can allow high-income owners to contribute substantially more than a 401(k) or SEP IRA in the right circumstances, which is why it often comes up for established professionals with strong, consistent income.

It is not a casual last-minute account opening. Cash balance plans require a formal design, actuarial calculations, ongoing administration, and a commitment to funding obligations. Still, for a successful practice owner who has fallen behind on retirement savings, it can be worth exploring as part of a coordinated strategy.

For Dentists, Chiropractors, and Sole Practitioners

Many self-employed dentists, chiropractors, attorneys, and other sole practitioners spend their early years reinvesting nearly everything into the business. Equipment, leasehold improvements, payroll, marketing, and professional expenses can push retirement planning down the list. Then a few profitable years arrive, and the owner realizes they need a more intentional savings plan.

A SEP IRA may be a strong first step for an owner-only practice because of its late establishment deadline and higher contribution potential. A solo 401(k) may be worth comparing when there are no eligible common-law employees. For a profitable Peachtree Corners practice with consistent cash flow, a 401(k) paired with a cash balance plan may deserve a more detailed analysis.

The answer depends on more than current income. It also depends on anticipated hiring, how variable profits are, the owner’s age, retirement timeline, and how much administrative complexity the business can reasonably manage.

A Practical Year-End Retirement Checklist

• Estimate 2026 business profit and available cash flow.
• Confirm whether you have employees who must be included.
• Review any existing retirement plan before opening another one.
• Identify whether a SIMPLE IRA deadline has already passed.
• Compare SEP IRA, 401(k), and cash balance options based on savings goals—not just the largest advertised limit.
• Coordinate plan decisions with your CPA or tax professional.

Explore the broader role of Retirement Plans in an employee benefits strategy, and consider how they fit within your overall Financial Planning. If you have retirement accounts from past roles, IRA Rollovers may also be part of the conversation.

FAQ

Can I set up a SIMPLE IRA in November for the current year?

Generally, no. An existing employer must generally establish a SIMPLE IRA by October 1 for it to be effective that year. A limited exception may apply to a new employer that came into existence after October 1.

Can I still open a SEP IRA after December 31?

Generally, yes. A SEP can usually be established for a tax year up to the due date of the business’s tax return, including extensions.

Which plan is best for a business with employees?

A SIMPLE IRA is often worth considering for a smaller team because employees can make salary deferrals. A SEP IRA may be less attractive if required employer contributions for eligible employees would be substantial. A 401(k) may offer more flexibility for a business ready for greater administration.

Can a self-employed owner have a retirement plan if they also work elsewhere?

Often, yes. However, contribution limits can interact across plans, particularly for employee elective deferrals. Review your full situation before contributing.

Do I need to move an old 401(k) before opening a new plan?

Not necessarily. Whether to keep, roll over, or consolidate a prior account depends on investment options, fees, plan features, taxes, and your broader financial plan.

To discuss a retirement strategy for your Atlanta, Sandy Springs, Peachtree Corners, or surrounding-area business, schedule a retirement planning conversation with Jay Thurlow, Some1 Family Office, and Kinetic Pathways.

Investment advisory services are offered through Kinetic Pathways Company, a registered investment adviser. This post is for informational purposes only and does not constitute investment or tax advice.