Retirement Planning For Small Business Owners

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This is currently what I have and should satisfy me for a few more years. A business owner may establish one and include their spouse in the plan, provided the spouse is an employee of the business.

I even opened up two separate accounts so I could invest with Betterment and another where I control my own investments. A solo 401(k) throws in a profit-sharing twist on the standard 401(k).

Things changed a bit when I started my own company.

I officially became a small business owner and had man more choices on retirement plans.

hen I worked for my old brokerage firm, I was a W-2 employee and the retirement plan options were simple.

I had the 401k and could also do a Traditional or Roth IRA outside of it.Additionally, solo 401(k) plans allow you to make tax-deductible profit-sharing contributions equal to 25% of your compensation (corporate entity) or 20% of self-employment income (sole proprietor). These plans do require a TPA (third-party administrator).Ultimately, the Solo 401(k) will allow me to contribute the most pre-tax, but my income has to get me there first 🙂 Here’s one way to compete with larger companies for prime employees.Under a SEP, the employer sets up an individual retirement account (IRA) for each eligible employee, which the employee owns and controls, but only the employer contributes funds.As the employer, you can contribute funds equal to up to 25% of your employee’s compensation or ,000 (for 2019), whichever number is smaller.Again, annual tax-deductible contributions may be made according to the 25%/20% rule depending on your business entity.Basically, this is a form of profit-sharing plan that rewards senior or key employees more than others.Contributions are tax-deductible, and your employees won’t have to pay taxes on the money until they withdraw it.One of the SEP’s main advantages is that it allows for flexible annual contributions from the employer.But which one should you choose – and what is the next step?Take a big step today and take advantage of all that is available in the marketplace – consult an independent financial professional and a CPA to review your options and find the program that fits your needs.


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