Time Domain

People often forget time in their analysis of situations. The classic example is that a dollar today isn’t the same as a dollar tomorrow. Most people have that under their belt.

Today, it was my turn to be reminded that playing time like a control variable is often forgotten. Question: When does a self-employed person have to submit SEP contributions to count for any year?

Table 1 on Page 3 of IRS Pub 560, “Retirement Plans for Small Businesses”, indicates contributions have to be done by the due date of the employers tax return — nominally April 15th of any year. That’s where I quit thinking.

In fact, the time can be extended with an arbitrary number of extensions. This gives an investor time to watch the market for the entire tax year, plus nearly the entire year following up until the final extension date that is available.

Sounds good. Personally, I’m not sure I’d be successful timing the market. But I certainly recognize it as a good freedom. Something I totally overlooked by not thinking in the time domain.

Suggestion:

Whenever you have something figured out, for example “Should the kids drive the car?”, “Should I marry John?”, “How many items should I buy?”, “Should I visit my relatives?”, “How much money do I owe?”, remember the question isn’t fully qualified until the time domain is included.