Building Your Golden Years: Retirement Options for S Corporation Owners

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Hello Businesses!

As an S Corporation owner, you’re constantly focused on growing your business. But amidst the hustle and bustle, it’s crucial not to overlook one thing – your future. Planning for retirement may seem far off, but the sooner you start, the brighter your golden years will be. Let’s delve into some retirement plan options you should consider.

1. Solo 401(k) Plan:

Also known as the individual or one-participant 401(k) plan, a Solo 401(k) is a retirement savings option designed specifically for self-employed individuals or business owners with no employees (other than a spouse). It allows for higher contribution limits. It can be up to $58,000 in 2021 or $64,500 for those 50 or older, and tax-deductible contributions, making it a favorite among S Corp owners.

2. Simplified Employee Pension (SEP) IRA:

A SEP IRA allows S Corp owners to contribute up to 25% of their income or $58,000 (whichever is less) in 2021. The standout benefit of a SEP IRA is its simplicity and flexibility – contributions aren’t required every year, making it a good fit for businesses with variable profits.

3. Savings Incentive Match Plan for Employees (SIMPLE) IRA:

For S Corps with fewer than 100 employees, a SIMPLE IRA can be a great choice. It allows for contributions up to $13,500 in 2021 (or $16,500 for those 50 or older). The plan requires employers to match employee contributions, making it a valuable tool for businesses aiming to attract and retain talent.

4. Traditional or Roth IRA:

While contribution limits are lower ($6,000 in 2021 or $7,000 for those 50 or older), Traditional or Roth IRAs offer tax advantages that can help S Corp owners save for retirement. Contributions to a Traditional IRA may be tax-deductible, while qualified withdrawals from a Roth IRA are tax-free.

5. Defined Benefit Plan:

Although more complex and costly to manage, Defined Benefit Plans can offer significant retirement savings and tax advantages, particularly for older business owners. These plans promise a specified monthly benefit at retirement, often based on earnings history and tenure.

Remember, Your Business is Not Your Only Asset

As an S Corp owner, it’s easy to pour everything into your business, but remember, diversification is key to financial security. By investing in a retirement plan, you’re investing in your future self. It’s never too early to start!

At Balannx, we take pride in guiding women entrepreneurs through the complexities of retirement planning, offering personalized advice to help you make the best decisions for your future. We’re not just your accountants – we’re your financial allies. Here’s to securing a future filled with prosperity and peace of mind.

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Hi, I'm Fiona.
Your CFO and profit strategist.

I am a CPA for female entrepreneurs. I am on a mission to help Ambitious female entrepreneurs take control their number, level up their Business finance and become wildly financial success.

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