Best Retirement Plan Options For Solopreneurs

Updated : Nov 06, 2019 in Articles

Best Retirement Plan Options For Solopreneurs


So in today’s video I’m going to talk
about the best retirement plan options for solopreneurs. I’ll talk
about the qualities of each, we’ll talk about starter plans and then
as you graduate in terms of being able to save more and invest more, and we’ll go all the way up
to the granddaddy of them all, which I call stacking retirement plans
where you can get up to a six figure tax deduction and save over $300,000
this year alone for retirement. It’s a beautiful thing and we’re
talking about it here in today’s video. Hi there. My name is Ashley Micciche, CEO and co owner of True North Retirement
Advisors where we help business owners exit their business and successfully
transition into the next phase of their life with financial security. One of the greatest benefits of being
a small business owner or even a solopreneur, which is what I’m
focusing on in today’s video, is that the world is pretty much your
oyster when it comes to retirement plan options for you and your business, but there are so many
different options out there. It’s really hard to know
which one is right for you. So the first plan that you’ll want to
look at setting up is a health savings account. Now a lot of people
are probably like really? I don’t even consider
that a retirement plan. Well it is because in a
health savings account, you get the Holy grail of tax benefits. You get tax deductible contributions, so money going into your health savings
account, you get a tax break on that. Then from there it grows tax free.
And then when you pull the money out, you don’t pay taxes on it. No other retirement plan can
match that triple tax benefit. And so as long as you use that money for
qualified medical expenses on the way out, you get those tax tax
benefits surrounding the HSA. And so health savings accounts HSAs, in 2019 if you’re setting
them up as a family, it’s $7,000 that you can contribute if
you’re setting them up as an individual. It’s half of that. And then in
addition to that, if you’re over 50, you can put another thousand dollars, in 2019 into your health savings account. And the fact that you can let this money
grow for you over time is an incredible benefit. Most people misunderstand the health
savings account in that they think it, it’s just for this year and they
have to use it or lose it. No. A health savings account, you
can put the money in there, you don’t have to use it for
medical expenses this year. You can set some of it aside and
invest it so that it can grow. So it doesn’t have to sit in cash,
it doesn’t have to be this year. You can build up a lot of money in your
health savings account that can be used for paying for healthcare expenses, which are expensive later
on in retirement. Okay, so let’s talk about the next step up. So you’ve got your health
savings account in place, you’ve started saving for that and you
want to save a few thousand more dollars. A great place to start is the
traditional IRA or a Roth IRA. Now the beauty of these is that you
don’t have any headaches related to your business because they’re just set up
on the side like a regular investment account and they’re not
associated with your business. So there’s no headaches regarding them. But the drawback is you don’t get a tax
deduction through the business of doing matching contributions
or anything like that. And the contribution rates are low. But if you’re only able to save a
few thousand dollars a year in 2019, the limits are $6,000 a year. If you’re under 50 and then another
thousand dollars if you’re over 50, if you’re eligible from an
income standpoint and you
don’t really want to mess with any other retirement
plans, these are a great option. If you’re a solopreneur, especially
if you’re just starting out, okay, then from there you can graduate
to either a sep or a simple IRA. I’m not going to spend a lot
of time on talking about these. These are sort of the starter
plans for your business. And what’s interesting to know about these
is that at any time you don’t have to start with a 401k plan right out
of the gate. You can grow and, and gradually work your way up to
a 401k as you save more over time. So even if you invest in some, or
if you establish a simple IRA today, you don’t have to keep that plan
going for the next 50 years. Like you’ve made your
decision and it’s done. You can terminate that plan
and then graduate to a 401k. So it’s important to know
that you can kind of walk, walk up the stairs here when it
comes to your retirement plans. So we have the SEP or the simple IRA. This is the beauty of these is that
this is where you start to get tax deductible contributions from
matching from your business. And with the simple IRA, for example, you can put about twice as much, if not more in certain
circumstances into the simple IRA. And then in addition to that, you put matching dollars in
from the employer side as well. Now if you have employees, this is where it starts to get a little
bit sticky because you’ll also want to cover them and you’ll have
certain requirements around
making sure that they are eligible and able to participate
in this plan as well. But it’s tremendously beneficial for
saving a little bit more if you want to save more for retirement. If you want bigger and
better tax deductions, implementing a 401k plan, you can do
this. By the way, if you’re a solopreneur, it’s called a solo 401k, extremely
easy to administer. In fact, you don’t even have to file a tax return
for a solo 401k until the assets get to $250,000. So really compelling
reason to set up a 401k early on, especially if you’re a solo entrepreneur, because you don’t have to worry about
all the headaches associated with, as they get more complicated if you, uh,
grow the 401k, if you add more people, truthfully, the 401k because
of the rules surrounding it, they can become headaches, but you can hire a third party
administrator to set up the plan. Make sure that you’re in compliance
every year. Do all your testing, do all your tax filing
forms for you. So we’ve, we’ve come a long way in that you can
hire people for a pretty reasonable costs to do all that for you so you
don’t have to worry about it. And what it allows you to do is save a
boatload of money every single year for retirement with the combination of a 401k, a profit sharing plan and matching
dollars on that 401k money in 2019. If you’re over 50, you can put up to $62,000 in
your 401k profit sharing plan. On top of that, we can stack on the cash balance plan, which I call the granddaddy
stacking method. And if you do that, you can save up to 300, actually more than $300,000
this year alone for retirement. So I’ve spent the entire month of September pretty much
talking about cash bonds, plans, the pros, the cons, who they’re appropriate for,
what they are, how you can set them up. So go back to some of those videos from
September where I talked about this in detail. I’m just going to
mention it here. These are not to be taken lightly because they are
only for certain specific businesses. In other words, really you need to be consistently
profitable in order to implement a cash balance plan. But if you are
a successful solopreneur, most people do not realize that you
could set aside over $300,000 this year alone in your retirement account. Get a six figure tax
deduction for doing so. And as I talked about in previous videos, other potential tremendous
benefits as well, especially if you’re a service provider
and you’re trying to qualify for that a qualified business income deduction. Not sure which plan is right for
you if you’re a solopreneur well, you’re in luck because that is a question
I’ve been helping my clients answer for the last 12 years. In the
link below in the description, there’s a link to schedule a
call with me, book a call to, talk about your situation in 15 minutes. I can tell you with pretty good certainty
which type of plan is going to be a good fit for you. That’s it for
today. Thank you so much for watching. My name is Ashley Micciche,
and before you go, please like comment and
subscribe to our channel. We put out new videos every single week. Thanks again for watching
and I will see you next week.

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