I sat down with a client last week, who is self-employed and facing a hefty tax bill for last year. I realized at that meeting that most of the self-employed are painfully unaware of the HUGE tax savings options they have.
If you’re self-employed, you have an option for significant retirement savings that is UNDER-UTILIZED, yet so extremely simple. Experts estimate that Americans will need 70 to 90 percent of their pre-retirement income to maintain their current standard of living when they stop working. It’s crucial for you to understand the opportunities in a Simplified Employee Pension (SEP) Plan.
You work 24/7 and save annually for a hefty tax bill in April, right? Neglecting to maximize retirement savings potential can be devastating now and in the future. The immediate impact of deferring a large amount of income to a SEP is a significant reduction in your tax liability. Long-term, you will be able to design your retirement experience without worry of outliving your money.
It’s not too late for 2018! You can open a SEP and fund it for 2018 up until the tax deadline next month!
Before making any long-term decisions about your retirement strategy, you should understand the ins and outs of a SEP IRA.
A SEP IRA…
- Requires very little paperwork
- Allows flexible contributions
- Allows investments to grow tax deferred
- Allows business owners to contribute up to the lesser of 25% of participants’ pay, or $56,000. In comparison, a traditional IRA has a maximum of $6,000 annually.
- Can be open and funded until Tax Day for the prior year
- If you have an employee, you must fund your employees SEP at the same rate as your own.
If you’re interested saving on your 2018 tax bill, contact us about opening a SEP IRA today before the TAX DEADLINE. Email Kevin at firstname.lastname@example.org and request a free Business Owner’s Guide for Retirement and an introductory financial analysis.