Solo 401k Tax Deductions for Small Business Owners
Many small business owners consider setting up a Solo 401k plan to start saving for their future. What some business owners do not realize is that by doing so, they can also take advantage of the Solo 401k tax deductions available. These amounts can be deducted from the business owner’s personal income or business income.
The Solo 401k plan has many benefits, such as the Checkbook control, which allows small business owners to take full control of their retirement accounts. Flexible investment choices are available, including real estate, private lending, precious metals, and more. Plan owners can also have the options of borrowing up to $50,000 from the plan at a low interest. However, the tax benefits are among the biggest advantages of the Solo 401k. Sense Financial discusses these Solo 401k tax deductions in the latest Solo 401k Quick Tip video:
Solo 401k Tax Deductions for Small Business Owners
A Solo 401k offered by Sense Financial can provide many tax-saving benefits. Solo401k contributions are tax deductible for the account holders. For corporations, salary deferral contributions can be deducted from the W-2 income, and profit sharing contributions are deducted from the business income. Sole proprietorship and other unincorporated businesses can deduct Solo 401k contributions from the plan owner’s personal income. Keep in mind that the salary deferral contributions to a Roth Solo 401k are not tax deductible. But with Roth Solo401k, account holders can enjoy tax-free withdrawals instead during their retirement.