This is a video about the 2022 Solo 401k Contribution Deadline. Learn about Solo 401ks, their tax benefits, Roth Solo 401k, who can contribute to a Solo 401k, and how to set up a SOLO 401k, here. Solo 401k Contribution Deadline Solo 401ks give you the ability to save a huge amount of money every year as a small business owner but it's important to know the deadlines and important dates throughout the year. If you intend on making a Solo 401k Contribution, the money has to be in the account by your tax-filing deadline. If the entity type is a Sole Proprietorship, the annual solo 401k contribution deadline is April 15th, or October 15th of any given year if the tax return extension is timely filed. Whether you should set up a Solo k heavily depends on what business type you have. If you operate as an independent contractor or if you own an S Corporation, you very well likely could benefit from setting up a Solo 401k. There are two types of contributions to Solo 401ks Employee Contributions Employer Contributions The IRS limit for employee contributions is $22,500 in 2023 and the limit for employer contributions is 25% of your net earnings up to a max combined contribution of $66,000 between employee and employer. Your contribution limits MATTER. If you overcontribute, you'll be charged penalties by the IRS. Solo 401ks are an essential part of your retirement plan as a small business owner. The tax deduction you get by contributing makes saving much more affordable (or alternatively, being able to do Roth Solo Contributions to your Solo 401k with no income limits). For this reason, we believe that if you own a sole proprietorship or are a small business owner, you should consider a solo 401k. How to Create A New Solo 401k Your first step in creating a new solo 401k is to get your plan document created for your plan participants (yourself). This plan document is filed with the IRS to inform them that the plan exists, to begin with. Normally, you'll hire a company to draft this for you. Progress Wealth Management can help you with this. If you'd like to read the IRS publication on this topic, click here. Once you've got your plan document created, you'll have to get an EIN created and pick a new broker and complete your new account application to actually create the account. From there, you'll have to decide whether you'd like to make an employee deferral contribution, a Roth Contribution, or an employer contribution. Keep in mind, there are catch-up contributions as well so if you'd like to make additional contributions above and beyond the limits described above, it may be possible if you're over 50. Who To Talk To Before Creating Your Retirement Accounts When deciding whether to save for your retirement as a small business owner in a SEP IRA, traditional IRAs for you and your spouse, or a Solo 401k or some other kind of account is a complicated decision. If you have any full-time employees, it gets even more complex. You could fall into a trap that could ruin your company or get you fined heavily by the department of labor. Don't make that mistake. Make sure you only talk to tax advisors or financial advisors that specialize in helping small business owners like the one you own. Progress Wealth Management is a company that provides this. We'll make sure you create the proper type of account and manage it properly throughout the tax year and for the remainder of your life. Conclusion This experience reminded me of the importance of seeking professional advice when it comes to your finances, especially for small business owners. It can be overwhelming to try to tackle financial problems on your own, but with the right guidance and a little bit of hard work, it is possible to turn things around and achieve financial stability. If you're a small business owner struggling with your finances, don't hesitate to reach out to a financial advisor. We're here to help!...(read more)
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