Transcripts Including Tag: solo401k

Description: Tax Optimization :: Retirement accounts for small biz

These are the transcripts that include the tag solo401k.

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012R: Friday Roundup Jonathan Mendonsa Yeah absolutely. So this first one I got came in actually this morning as a recording this from Evan and Evan says hey guys I heard you on the radical personal finance podcast I just got done doing my taxes for the year and I think I may have stumbled on to something I haven't read anyone doing this before although I'm sure people have. But I think he'd be helpful for folks to hear about. Here's a short story. Self-employed. Last year I paid around eight thousand dollars in taxes this year making the exact same amount and we paid around 2000 taxes and my technique involves fully utilizing SEP and individual 401k plans in addition to the traditional IRA and Evan apparently has made a bunch of spreadsheets to optimize what what he earned in terms of income salary and to minimize his Social Security and Medicare payroll tax. And he also was able to maximize his Earned Income Tax Credit and a saver credit while paying $0 in federal tax So Evan says Hey let me know if you would like for me to send over the full article or talk about this in detail. And so this is my open segue to say yes Evan we want to talk to you about this stuff. And in fact that's what Brad and I had in mind for this. We keep saying it. This is by the fire community for that fire community. So we're going out and grabbing people that have been doing this for five six 10 years and have just tons and tons of content and they note a lot of stuff and they've packaged it really well and we're bringing them on the show and they're sharing it with us and we're learning from them. But there are millions of new articles that are being written every single month and some of them are game changers. And so what we want to do is if you have a good idea or you know someone has a really good idea we want to find that content and we want to talk to you and we want to get those ideas out there so we can all benefit from them. So Evan is our way of saying absolutely send it all over let's have a conversation and talk about it.
026: Physician on Fire Milo "Physician on FIRE" Andersson Well we've we've certainly talked quite a bit about our marginal tax bracket being high. So you want to do everything you can to lower your taxable income. And so I recommend filling up every tax deferred bucket that you can even if you have a Roth option. It may not make the most sense when you know when you're paying 40 percent or more on every last dollar earned. So for me that means maxing out a 401K a 457 B and an HSA every year if you were in a self-employed situation you may have a solo 401k or maybe a SEP-IRA there are other other avenues where you can still put away about 50000 or more per year tax deductible. After that I think a taxable account is also, it's a bad name, but it's a great account if you keep your funds in it in low dividend funds. It actually can act fairly similar to a Roth particularly if you retire without a ton of income in those retirement years. You can take money out of that without paying taxes as long as you stay in that lower 15 percent tax bracket. Now that all depends on how our tax code changes over the years. But I'm planning on paying very little in taxes once I'm done.
030R: The Side Hustle Crowdsourced Case Study Jonathan Mendonsa And it gives us an opportunity to explore all the financial stuff that goes along with creating a side hustle just in the states creating the solo 401k versus the SEP IRA looking at tax code as it affects the entrepreneur. And then along with that looking at the problem a little differently looking at unconventional answers to very typical problems the story is chills down my spine. Awesome right that we get a chance to build continuity start with a baseline and we get to incorporate all these concepts as they apply. And then I think that along the way as usual I will find a way to incorporate my second gen FI pitch into this conversation how to get your kids involved. And I'm working on Edmund Tee to set up this method to the Edness segment because he has taken everything he creates businesses around optimizing his entire tax schedule. It's incredible and he gets his family involved and he starts businesses depending on the stage of life that his kids are in it's really it'll blow your mind. And so as we can weave all these really cool ideas into this conversation there's so much to learn every single step of the way. It's very inspiring to me. And Brad even though I very much doubt that we're going to pick you for our case I promise you'll get to be a part of it.
033R: The Friday Roundup Thomas - (voicemail contributor) Hey Brad and Jonathan this is Thomas AKA K12FI guy here. I wanted to share what I believed to be the most amazing side hustle for teachers and others of a bachelor's degree or higher especially for ones who want a guaranteed amount of pay per hour. I teach English online to five to 12 year old Chinese students with a company called V.I.P kid as someone who is teaching experience in a bachelor's of any kind they're eligible to apply. We have over 10000 teachers. You can work as much or as little as you want. Day by day week by week so long as classes are available you open half hour time slots and kids choose you. Since my first week back in January. All openings and I choose open books. I've worked over 25 hours some weeks. Weekends are also available to add to flexible curriculum and lessons or an online powerpoint or video chat format. The company thinks of all the teaching materials you as a teacher are just present it and talk to the students. Teachers can draw in and advance the slides and students can draw as well. It's super easy engaging in all honesty very rewarding pay is by the class. And averages to about $20 an hour or more if you include bonus incentives which are always going on. I personally average between 20 and 23 dollars an hour every month. This money is all earned is an independent contract which means someone who can sign up fidelity Schwab or Banharn and have access to that so 401-K an employee who works over just 18 hours a week can fully fund that solo 401K. And if someone is a public educator meaning they typically don't teach during the summer they didn't work was during the school year and both up to full time or full time plus during the summer to max out that's solo 401K. Again you have total flexibility. Now here's the cool part. If kids cancel within 24 hours no problem. Still getting paid full pay for subscribe. Students half pay for trial students that is students that are trying out a couple of classes for free. If you teach those lessons to kids you get full pay and if they don't show up you could get half still got a bad deal. It really isn't amazing gig. Now I've just signed my second six month contract with them. I wanted to make sure it was a viable solo venture before plugging them. Some people have been hired without formal teaching experience that is they have a bachelors and they may be babysat or they were a team trainer or they did substitute teaching. Most teachers are certified public educators but some are not. But you can reasonably tailor your resume as long as you have that bachelor's and try to get this go if you do get approved the interview process includes a month lesson or two. But again it's totally worth it. I've averaged over $1200 dollars each month since February. I Intend to up my average hours a week to closer's two K per month. Some teachers make over 50 grand on there. I will say that I do have a referral link as I earn $50 more for each referral that is hired. Now I have begun creating my own through email coaching courses well To help guide potential hires for the company through the hiring process which is encouraged by the company. So if someone uses my preferred link I get their email and I am able to communicate with and guide them through the hiring process to increase their success. See something like only 2 percent of total applicants are hired for me. Over 10 percent of my referrals do thanks in part to this coaching program. I've begun to feel free to share this with the community with or without my referral links. Anyone that does use them. I'll help out with my course. I'll be glad to coach through the hiring process. I'm happy to email phone call or even Skype and demo a lesson before they are mocked with the company. For those that use MY referral Again totally free and this is a magic opportunity for sidehustles with little or no capital required cooling down again. And of course you guys I'm sure are very proud. Cheers.
040R: The Reset Button Alex - (voicemail contributor) Hi Brad and Jonathan. Love the podcast. And just had a quick question I thought I'd send you your way. I have a little side hustle business doing landscaping work outside of my 9 to 5 and I just kind of came across the idea of some of these retirement plans that are accessible to self-employed individuals. Solo 401 K SEP IRA and simple IRA and there may be others that I'm not aware of. It's very new to me. So I just was curious if there was something you or any of your in-house experts had experience with or input on kind of the best route forward you maybe most effectively saved some of this additional income from it. Thanks.
054: Fully Funded Lifestyle Change Jonathan Mendonsa All right. So now as a budding entrepreneur crafting this show and seeing where this goes. There are some questions that you need to come up with how you're going to approach saving for retirement because obviously savings doesn't stop once you become an entrepreneur or once you pursue this path it's still important to have a high savings rate and it's very important to understand how tax optimization changes once you move out of W-2 income and to self employment income. That entire structure changes. And so this is a conversation that in large part we're going to defer until we're actually doing this story with Alan Donnegan and Talis talking about building a side hustle and at some point in that journey we'll use that storyline or our storyline here choose FI to bring on different accounts to share their perspective on how they would go about optimizing this particular path. Do you do a SEP IRA. Do you do a solo 401k. How do you plan for your tax bill. You know a very interesting statistic came across my desk recently as I was reading a book which we'll talk about in a future episode called freelance to freedom and the number one reason that small businesses fail is because the owners fail to plan for tax time or underestimate the tax burden. And that was incredible to me and shocking. So it's twofold one how to plan for tax season if you're a small business owner and to how to save for your own retirement and some of the unique advantages that small business ownership actually gives you over being an employee. So all of that is a fascinating conversation and it's why it's so much fun that you don't have to rely on my experience as a pharmacist. But we have Brad who has background as an accountant and we can actually bring accountants on the show to share their particular your life hacks and tips that they've implemented into their own business practices and advice they've given to their clients so that will definitely add to the picture.

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