OPINION: If you really want to rev up your retirement savings and minimize income taxes, the best thing to be is a late-career professional in private practice. If you have self-employment income, your limits are much higher than regular 401(k)s.
If you really want to rev up your retirement savings and minimize income taxes, the best thing to be is a late-career professional in private practice. When you’re making a lot of money and are close to retirement age, you have savings options that go way beyond the levels of the typical workplace 401 plan.
You get to the bigger numbers when you’re in the position of being both the employee and the employer. For SEP IRAs or solo 401 plans, which are designed for those who file Schedule C for self-employment income, you can defer up to the total limit allowed for both employee and employer, which will be $66,000 for 2023. For cash-balance pension plans, a type of defined-benefit plan you can set up for yourself as a solo practitioner, the IRS says you can defer up to a benefit of $265,000.
If it sounds complicated, it’s because it is. You can’t do the actuarial calculations yourself, so you need to hire a third-party administrator at the cost of several thousand dollars a year. The endgame with a cash-balance plan is not necessarily to get an annuity-like payment as you would with a pension. Your earnings accumulate in an account much like a 401 and most users plan to roll over the funds into an IRA at retirement and manage the accounts on their own.
For these plans, you can contribute up to the $22,500 maximum amount allowed as an employee first, and then you can contribute more as the employer. For a SEP, it’s 25% of your net self-employment income up to the $66,000 maximum combined limit for 2023. For a solo 401, you can contribute all your self-employment income, up to the $66,000 maximum combined limit in 2023, so most times this works out to be a higher dollar amount than the SEP.
Brasil Últimas Notícias, Brasil Manchetes
Similar News:Você também pode ler notícias semelhantes a esta que coletamos de outras fontes de notícias.
IRS announces improvements, hires 4,000 workers to help during 2023 tax seasonThe IRS says the improvements are tied to the Inflation Reduction Act funding that was approved in August and are part of a wider effort.
Consulte Mais informação »
Mobile woman sentenced to 2½ years for embezzling more than $265,000A woman who admitted to embezzling more than $276,000 will go to prison for 2½ years, a federal judge decided Monday.
Consulte Mais informação »
New Tax Credit A 'Game Changer' For Ford's Commercial EVs: CEOThe Inflation Reduction Act adds a tax credit of up to $7,500 for light commercial EVs from 2023, with no restrictions on battery sourcing or manufacturing.
Consulte Mais informação »
'The Invitation's Thomas Doherty Cast Opposite Kiki Layne in ‘Dandelion’‘Dandelion’ is currently in production and is expected to be released in 2023.
Consulte Mais informação »