When must a new plan be established to meet the requirements for contributions?

The correct choice is that a new plan must be established three months prior to the end of the year to meet the requirements for contributions. This timeframe is important because it aligns with certain IRS regulations that dictate when a plan must be set up in order for contributions for that plan year to be eligible for tax advantages and deductibility. Establishing the plan within this period ensures that both the employer and employees can maximize their contributions for that tax year, allowing for effective planning and compliance with necessary regulations.

The specific three-month window before the end of the year is designed to give the plan sponsor ample time to set up the plan and communicate it effectively to participants before the calendar year closes, facilitating proper payroll deductions and contributions from employees and matching contributions from employers.