Secure 2.0 and the Ultimate Tax Mulligan: What Business Owners Need to Know

In golf, a mulligan is a do-over—a second chance to take a shot without penalty. What if you could get the same deal with your tax planning? Thanks to Secure 2.0, business owners and high-income earners now have a rare tax mulligan, allowing them to make retirement contributions past traditional deadlines and significantly reduce their 2024 tax liability.

Most taxpayers assume that if they miss the December 31st deadline for retirement contributions, they’re out of luck. But Secure 2.0 changes the game, giving business owners more flexibility to optimize tax-saving strategies well into the next year.

But here’s the catch: this opportunity won’t last forever. Let’s break down what Secure 2.0 means, how you can use it to lower your tax bill, and why acting now is crucial.

How Secure 2.0 Changes Traditional Tax Planning Rules

Secure 2.0—the massive retirement legislation passed in late 2022—introduced major changes for tax and retirement planning. One of the biggest advantages? Extended deadlines for certain retirement contributions.

1. Business Owners Now Have More Time to Contribute

Traditionally, if you wanted to reduce your tax liability for a given year, you needed to make retirement contributions by December 31st (or, at the latest, by the tax filing deadline for IRA contributions). Secure 2.0 changes that by allowing extended deadlines for employer-sponsored plans like SEP IRAs, Solo 401(k)s, and certain defined benefit plans.

This means business owners can make retroactive contributions—even after the new year—to lower their taxable income for the previous tax year. In other words, you get a tax-saving do-over.

2. New Flexibility for High-Income Earners

High-income earners often struggle with tax planning because most traditional deductions phase out at higher income levels. However, Secure 2.0 provides new avenues to maximize retirement contributions and strategically lower taxable income.

For example:

Increased catch-up contributions for older business owners (age 50+).
Delayed required minimum distributions (RMDs)—meaning more time to grow tax-deferred savings before tapping into them.
New Roth 401(k) matching contributions for tax-free growth opportunities.

3. Retirement Plan Auto-Enrollment for Employees

Starting in 2025, Secure 2.0 requires many businesses to automatically enroll employees in retirement plans. This means business owners need to plan ahead to take advantage of tax credits and deductions associated with offering these benefits.

What This Means for Business Owners Looking to Lower Their 2024 Tax Liability

If you’re a business owner or high-income earner, Secure 2.0 offers a game-changing opportunity to retroactively lower your 2024 tax bill by making contributions in early 2025. Here’s what that means for your bottom line:

1. More Time to Reduce Your Taxable Income

Instead of rushing to max out contributions before year-end, Secure 2.0 gives you additional months to evaluate your tax situation and make contributions strategically. This extra time can be critical in identifying the right amount to contribute based on your final income figures.

2. Retroactive Contributions = Lower Taxes

A business owner earning $500,000 can still make a retroactive SEP IRA or Solo 401(k) contribution early in 2025 and apply it to their 2024 tax return. This can immediately lower taxable income—potentially saving tens of thousands of dollars in taxes.

3. New Tax Credits for Retirement Plan Contributions

Secure 2.0 also introduces new tax credits for small business owners who establish retirement plans for employees. If you haven’t set up a 401(k) or SIMPLE IRA, now might be the time—not just for the tax benefits but also to attract and retain employees.

How to Take Advantage Before It Expires

To make sure you don’t miss out on this rare tax-saving opportunity, here’s what you should do right now:

1. Work with a Tax Advisor (Don’t DIY This)

Secure 2.0 presents complex rules, and the best tax savings happen when your tax and financial advisors work together. Partner with a firm like Collective VFO to ensure you’re leveraging every available deduction.

2. Review Your 2024 Income & Expected Liabilities

Before making retroactive contributions, analyze your total income for 2024. Are you in a higher tax bracket than expected? Would an extra $50,000+ in tax-deferred contributions push you into a lower bracket? Understanding these details is key.

3. Choose the Right Retirement Vehicle

Secure 2.0 allows for multiple types of contributions—SEP IRAs, Solo 401(k)s, and even defined benefit plans. Each has different contribution limits and tax advantages, so choosing the right plan is crucial.

4. Act Before the Deadlines

While Secure 2.0 extends the time frame, it doesn’t last forever. Deadlines still apply, and the earlier you take action, the more options you have.

Final Thoughts: Your Tax Mulligan Won’t Last Forever

Secure 2.0 isn’t just another tax law—it’s a golden opportunity for business owners and high-income earners to rewrite their tax strategies and maximize retirement savings. Please speak with our experts at Collective VFO today. 

With extended contribution deadlines, you have more control over your tax liability than ever before—but only if you take action before time runs out.

And if you’re looking for even more advanced tax strategies, don’t miss our next article: “How Tax Season Can Be a Strategic Opportunity (Not Just a Compliance Exercise)”—because the more proactive you are, the less you’ll pay the IRS.