Increasing your income to contribute more to your solo 401k can help you reduce your federal income tax. BUT you should do this first to make sure it makes sense! ///////////////////////////////////////////////// Get answers FASTER... Join this channel to get access to perks: Chat on discord: Join Link Support on Patreon: Get IRS FORM W4 TAX WITHHOLDING HELP HERE STARTING AT $39. bit.ly/3FJ6w8U ----------------------------------------------------- Are you ready for professional investment advice? We can help you with financial planning and asset management. Let us guide your investments to your financial freedom. START HERE Our financial planning process is an ongoing relationship because as you grow, your financial plan grows with you. At Sickle Hunter Financial Advisors, we believe that saving and making sound financial decisions will help improve your life’s changing needs and objectives. Retirement, college planning, wealth building, social security, and career benefit packets are only a few of the financial decisions that you may face in your lifetime and we’re here to help guide you. TRAVIS T SICKLE, CFP®, EA®, AAMS®, CRPC®, RICP® CERTIFIED FINANCIAL PLANNER™ Company Website: twitter: @travissickle Instagram: Facebook: LinkedIn: Sickle Hunter Financial Advisors 1646 W Snow Avenue Suite 144 Tampa, FL 33606 Check out Google Business Profile ------------------------------------------------------- Gear Used in Videos Partnership referral links Solo 401k Plan Documents Aura Identity Theft Protection *Up to 50% off* HTTPS://www.aura.com/travis Bitcoin IRA All Amazon links are affiliate links ____________________________________________________________________________ Information in this video is for educational and entertainment purposes only. sicklehunter.com/disclosures ____________________________________________________________________________ #travissickle...(read more)
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Should I Increase My S-Corp Salary to Increase My Solo 401(k) Company Match? One of the perks of being a business owner is the ability to determine your own salary. For those who have chosen the S-Corporation (S-Corp) structure, this decision can have an impact on your business's tax obligations as well as your personal retirement savings. Many business owners who have a Solo 401(k) plan often wonder whether increasing their S-Corp salary will result in a higher company match for their retirement account. Let's delve into this question to help you make an informed decision. Understanding the Solo 401(k) Plan Before we delve into the salary discussion, let's briefly understand what a Solo 401(k) plan entails. This retirement savings option is designed for self-employed individuals or small business owners with no employees, apart from a spouse. It offers the ability to contribute both as the employer and the employee, providing substantial tax benefits. As an employee, you are allowed to contribute up to $19,500 (in 2021) of your compensation as elective deferrals to your Solo 401(k). Additionally, as the employer, you can make a profit-sharing contribution of up to 25% of your compensation, which is subject to a maximum overall contribution limit of $58,000 for those under the age of 50. For those aged 50 and above, an additional catch-up contribution of $6,500 is permitted. Salary and 401(k) Company Match Now that we understand the basics, let's address the question at hand. Will an increase in your S-Corp salary result in a higher company match for your Solo 401(k)? The answer is, it depends. The key factor to consider is the S-Corp's profits and taxable income. In an S-Corp, the profits "pass through" to the owners and are subject to individual income tax rates. By increasing your salary, you would also increase your taxable income, potentially resulting in higher tax obligations for both you and your business. Since a Solo 401(k) profit-sharing contribution is based on a percentage of your salary, increasing your salary would indeed increase the company match. However, keep in mind that your individual tax burden and the overall tax liability for your business will also be impacted. Tax Implications and Considerations Before making any decisions, it is crucial to consult with a certified tax professional or financial advisor who can evaluate your specific situation. They can advise you on the potential tax implications and whether increasing your salary aligns with your overall financial goals. Additionally, bear in mind that increasing your salary should be supported by a valid business reason. It is essential to maintain a reasonable salary for the services provided to your business. Setting an unreasonably high salary with the sole intention of maximizing your Solo 401(k) match may raise a red flag with the IRS. Other Retirement Savings Strategies If increasing your salary to increase your Solo 401(k) match is not feasible or advisable, there are alternative strategies to boost your retirement savings. You can consider contributing to other tax-advantaged retirement accounts, such as a Traditional or Roth Individual retirement account (IRA), which offer their own contribution limits and benefits. Conclusion Deciding whether to increase your S-Corp salary to enhance your Solo 401(k) company match is a complex matter. It requires careful consideration of both financial and tax implications. Seeking guidance from certified professionals who specialize in small business taxation or financial planning is highly recommended. They can help you make an informed decision that aligns with your long-term financial goals and maximizes your retirement savings potential. https://inflationprotection.org/is-it-beneficial-to-raise-my-s-corp-salary-in-order-to-maximize-my-solo-401k-company-match/?feed_id=113576&_unique_id=64a24b4e7d4ec #Inflation #Retirement #GoldIRA #Wealth #Investing #incometax #incometaxcalculation202021 #selfdirectedira #Solo401k #travissickle #401k #incometax #incometaxcalculation202021 #selfdirectedira #Solo401k #travissickle
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