Running a one-person business has its perks, especially when it comes to retirement savings. If you’re a sole proprietor or own an S or C corporation, a Solo 401(k) plan could be your ticket to higher retirement savings and tax benefits.
A Solo 401(k) combines two key components:
Elective Deferral Contributions - Allows you to set aside up to $23,000 for 2024 if you’re under 50, or $30,500 if you’re 50 or older.
Employer Contribution - Adds up to 25% of your salary or 20% of your self-employment income, bringing the combined total to $69,000 in 2024 (or $76,500 for those 50+).
This structure is flexible, letting you contribute more in good years and less during leaner times. Plus, Solo 401(k)s often feature lower administrative demands compared to traditional plans.
However, high-income earners may not see a significant advantage, especially if they’re under 50, as the Solo 401(k) has a cap. Also, adding employees would mean adjusting to regular 401(k) rules, which may complicate the plan.
If you’re unsure whether a Solo 401(k) is the right choice, consult your benefits advisor for guidance. Verity CPAs can help you explore your options and maximize your retirement savings. Contact us at info@verity.cpa or call 808.546.5026 to get started.
Comentarios