October Is the Last Window for Small Businesses to Set Up Key Retirement Accounts for 2026

October is the last practical window for small business owners to establish certain retirement accounts that can reduce their 2026 tax bill, and financial planners say many owners miss these deadlines every year.

SIMPLE IRAs must be established by October 1 to allow employees to make salary deferrals for the current tax year. Employers who miss this deadline cannot set up a SIMPLE IRA for 2026 and must wait until the following year.

Individual 401(k) plans, also called solo 401(k)s, must be established by December 31 for self-employed individuals and single-owner businesses. However, financial advisors recommend setting them up in October to allow time for paperwork processing and to avoid year-end delays.

SEP IRAs are more flexible. Business owners can establish and fund a SEP IRA up to the tax filing deadline, including extensions, which can push the window to October of the following year. But advisors say waiting that long reduces the time the money has to grow.

The contribution limits for 2026 are significant. SIMPLE IRA participants can contribute up to $16,500, with a $3,500 catch-up contribution for those 50 and older. Individual 401(k) participants can contribute up to $23,500 in employee deferrals, plus employer contributions up to a combined limit of $70,000. SEP IRA contributions can reach up to 25% of compensation, capped at $70,000.

For a self-employed individual earning $150,000, maxing out a solo 401(k) could reduce taxable income by $23,500 or more, depending on the employer contribution calculation.

Financial planners also note that October is a good time for small business owners to review their overall retirement strategy, assess whether their current plan type still fits their business structure, and make any adjustments before year-end.