Pick A Retirement Plan For Your Business
Self-employed retirement accounts could yield substantial tax savings, yet many business owners overlook them. Here's your comprehensive guide to selecting the ideal retirement plan:
Three Key Factors:
Savings Potential
Employee Considerations
Business Flexibility
IRA & Roth IRA:
Low contribution limits ($7,000 or $8,000 if 50+).
Simple setup ideal for early-stage businesses with modest savings goals.
Health Savings Account (HSA):
Triple tax advantage for medical expenses.
Requires enrollment in a High Deductible Health Plan (HDHP).
Contribution limits vary based on coverage.
For Beginner Entrepreneurs:
Combine IRA/Roth IRA with HSA for flexible contributions ($11,150 - $15,300).
SEP IRA:
Allows up to 25% of net earnings with a cap of $69,000.
Employer contributions only, must match employee percentages.
Solo 401k:
Ideal for self-employed with no employees.
Allows contributions as both employer and employee, with higher limits than SEP IRA.
For Intermediate Entrepreneurs:
Leverage Solo 401k, Backdoor Roth, and HSA for increased contributions ($80,150 - $92,800).
Cash Balance Plan:
Pension-like plan with higher contribution limits based on age and business factors.
Suitable for older business owners with stable cash flow.
For Advanced Entrepreneurs:
Combine 401(k) with Cash Balance Plan for substantial contributions.
TL;DR:
Beginner Entrepreneur:
IRA/Roth IRA + HSA
Intermediate Entrepreneur:
Solo 401k + Backdoor Roth + HSA
Advanced Entrepreneur:
401k + Cash Balance + Backdoor Roth + HSA
If you have any other questions regarding picking a retirement plan or anything else similar, please feel free to reach out at (615) 844-3398 or Jim.Maddux@raymondjames.com.
Disclosure:
Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
