If you want a 2026 deduction, the design conversation starts now

August 30, 2026, is the start of the window that matters, not the end of it. If you want a deduction for 2026 from a plan you do not yet have, the design conversation starts now. Not in December, when the remaining payroll cannot carry a year of 401(k) deferrals. Not in March 2027, when the actuary is supposed to certify a benefit nobody documented. And not on the vague theory that the SECURE Act lets you adopt a plan at the tax-filing deadline and therefore lets you postpone thinking. The statute does give a new plan a later adoption date than the old rules did. It does not gather the census, open the trust, or invent compensation you never paid. Start the design conversation in the next two weeks if 2026 is supposed to be a pension year.

Sterling Pension Group LLC in West Hartford is a third-party administrator. We are not an actuarial firm. An independent Enrolled Actuary certifies any valuation that a real plan requires. This briefing is not tax, legal, or actuarial advice. The deduction is your CPA's conclusion. The document has to exist before that conclusion has something to rest on.

What "start now" is asking you to produce

A usable start is a census and a profit range, not a signature. Names, ages, dates of hire, hours, ownership, family relationships, and compensation the plan can actually see. For an S corporation, compensation is wages. A distribution is not wages. For a partner or a sole proprietor, compensation is earned income the CPA computes. For 2026 the plan cannot count more than $360,000 of anyone's pay. A sentence that says the practice will "make about a million" is not a census. A sentence that says the owner-employee will be paid $360,000 if the fourth quarter holds, and $240,000 if it does not, is a census.

The profit range should include a lower case. The credit you adopt has to be fundable in that lower case, or it has to sit in a document range you can set before the accrual is locked. A cash balance plan is a multi-year promise. Starting one on August 30 because this year was strong, with no view of next year, is how firms meet the permanency problem later. The briefing on the several-year promise is the longer warning. Read it before you ask for the maximum.

Also list every plan you already have. A 401(k), a SEP, a SIMPLE, an old defined benefit plan that was never fully terminated, a plan at a related company. The SEP document in particular may forbid another qualified plan. Coordination is required. A SEP does not stack freely on a cash balance credit. The briefing on leaving a SEP is the sequence. Related employers belong on the same list. A billing company or a second practice you treat as separate may not be separate for testing.

The clocks that are already running

Some of them are about 2025, and they will steal September if you let them. The minimum funding contribution for a 2025 calendar-year defined benefit plan is generally due September 15, 2026. That is sixteen days from this briefing. It is not the 2026 design. It is last year's promise coming due. An unpaid minimum generally draws an excise tax of 10 percent under section 4971 until it is corrected. If that deposit is still outstanding, it is the first wire. The design conversation is the second. The deduction for the 2025 deposit often follows the 2025 return, including extensions, which for many practices is the same neighborhood of the calendar and is still a different rule. Your CPA says which year gets the deduction. The actuary says what the minimum is. Publication 560 keeps the plan types straight while they do that.

The 2025 Form 5500 was due July 31, 2026, or October 15, 2026 if Form 5558 was filed. If the extension is in place, October 15 is six weeks away. Signing that return is not the design of 2026. Ignoring it will consume the people you need for the design. The calendar should show September 15 and October 15 as 2025 obligations, and a separate line for the 2026 adoption work.

For 2026 itself, the fast clock is the 401(k) deferral. The elective deferral limit is $24,500. Catch-up is $8,000, or $11,250 if you are age 60, 61, 62, or 63. Those dollars have to come from wages not yet paid, under an election made before the compensation is available. Paychecks already issued cannot be deferred backward. If there is no 401(k) today, the remaining payroll of 2026 is the only 2026 deferral you will ever have. A design that begins in January 2027 can still create a pension deduction for 2026 in some cases. It cannot create a 2026 deferral. Owners who care about both should not use the pension's more forgiving calendar as an excuse to wait on the deferral.

Roth catch-up is operational now. If your FICA wages from this employer in 2025 exceeded $150,000, the 401(k) catch-up generally has to be Roth. The rule does not apply to cash balance pay credits. Final regulations are stricter in 2027. For 2026, ask the recordkeeper whether payroll is set for good-faith compliance. Do not spend the design meeting trying to become your own counsel on the regulation. Confirm the election and move on.

The limits were announced in IR-2025-111 on November 13, 2025, in Notice 2025-67. The IRS cost-of-living page is the table. Defined contribution annual additions are $72,000. The defined benefit ceiling is an annual benefit of $290,000, explained on the IRS benefit limits page. That $290,000 is not a deposit and not a target you wire because the month is August. There is no flat IRS cash-balance contribution cap. Any figure in a proposal is illustrative until the enrolled actuary certifies it on your census.

What the late-adoption rule does not include

The SECURE Act generally allows a new qualified plan to be adopted as late as the due date of the employer's return, including extensions, and still be treated as adopted on the last day of the tax year. For a calendar-year practice that extended, that date may fall in September 2027 or October 2027. The rule is real. It is the reason a promoter can say "you do not have to decide until you see the final numbers." Seeing the final numbers before you lock a deposit is prudent. Seeing them before you start is how the census arrives incomplete.

Employee notices, a trust identification number, an investment account, a fidelity bond, a document that has been read, and an actuarial illustration that uses this year's wages all take weeks when they are done calmly and fail when they are done between Christmas and the filing deadline. If staff must be included, they must be included on purpose, with a benefit the test will accept. Discovering the staff in March 2027, inside a plan you have already mentally funded at an owner-only illustrative maximum, is an expensive discovery. The staff-cost briefing explains why the $360,000 cap does not cap that discovery.

A plan that already exists cannot use the new-plan adoption rule to pretend 2026's formula is still open. Amendments that reduce an accrued benefit are not a fall project. Amendments that reduce future accruals need to be timely and, where the cut is significant, noticed in advance. If you already have a plan and you want a different 2026 credit, say so this week, not after the accrual language has done its work. The halfway briefing was the July version of that instruction. This is the August version. The facts have only gotten more concrete.

What a September scope can still accomplish

It can produce an illustrative range at two profit levels, with staff cost in dollars beside the owner credit. It can tell you whether a SEP must stop. It can open a 401(k) deferral election for the remaining payroll, which is the piece that truly cannot wait. It can identify whether the firm is inside the professional-service exemption from PBGC coverage or not. Coverage is plan-specific. Many small professional-service plans are exempt. Not all. A plan that has had more than 25 active participants, or an employer that is not a professional-service employer, does not inherit an exemption from the owner's impression that the firm is small. The PBGC coverage page is the reference. Premiums, if they will apply, belong in the cost of saying yes.

It can also tell you no. A wage under the level that supports a meaningful benefit, a partner who will not fund year two, a staff cost that consumes the deduction, a practice you are selling: those are reasons to stay with the defined contribution plan you have. The note on when a plan is not a fit is a successful outcome of a September conversation. So is a combo of a 401(k) and a cash balance plan when the census supports it. So is a self-employed design when there really are no employees. The failure is a December illustration with no census behind it.

The calculator can start the arithmetic. It cannot see related employers, and it cannot know whether your SEP document is in the way. Use it as a prompt for the range you send a human. Do not use it as the range.

Deductible timing for the 2026 contribution, once a plan is in place, will often follow the 2026 return including extensions. That date is in 2027. Minimum funding for the 2026 plan year will generally be due September 15, 2027. You are not being asked to wire a 2026 pension contribution on August 30. You are being asked to know whether a 2026 accrual should exist. Owners who wait for the wire date to begin the design miss the accrual year and keep the wire.

What to do in the next two weeks

Send five items: entity type, a census with ages and pay the plan can see, the plans you already sponsor including any SEP, a profit number and a lower profit number, and whether you expect to hire or sell before year-end. If the September 15, 2026 minimum for an existing plan is unpaid, say that in the first line so it is not mixed into the 2026 illustration.

Ask for an illustrative owner credit and an illustrative staff cost at the two profit levels. Ask, separately, whether a 401(k) deferral election can still be installed for the remaining 2026 payroll, and whether Roth catch-up applies because 2025 FICA wages exceeded $150,000. Ask the CPA which return the 2025 deposit is supposed to ride on, so September's wire is not the wrong year's wire.

Then start the conversation with those pages, not with a target deduction. The useful subject line is the year you mean. A 2026 deduction is still possible for many firms on this date. It is no longer possible for firms that intend to begin thinking about it in December.