Tricia Bailey from Future Plan rejoins us today to talk about savings vehicles for the self-employed. We start with the various limits on SEP IRAs and various 401k plans. This can include a spouse if he or she is being paid by the business.

We spend a lot of time today on a vehicle that isn’t often discussed – a cash balance plan. This is an amazing opportunity for high net-worth individuals, who wouldn’t have enough savings to support their lifestyle in retirement-based contributions limits of the traditional methods. You can put $260,000 or more per year into this account depending on your age and income. It’s pre-tax dollars, so it is not included in your annual income. Yes, you’ll have to pay taxes upon withdrawal, but that could be at a time when you’re in a lower tax bracket.

Tricia shares examples from doctors and dentists, and what they were able to accomplish with plans like these. Or, if you have a “side hustle” in addition to your 9-5 job, that “side hustle” cash could be saved similarly.

These plans can also be used to mitigate tax exposure when selling a business or dealing with succession planning. Tricia explains some of the rules around contribution limits and timeframes.

If you have additional questions, you can reach Tricia Bailey at 248-520-6372 or tricia.bailey@futureplan.com

Email Paula Christine at Paula@PaulaChristine.com. You can also learn more online at www.PaulaChristine.com.