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Self Employed, Young, High Income -How to structure savings?

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Retire_early
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Self Employed, Young, High Income -How to structure savings?  Reply with quote  

I am young (25) and am a 1099 contractor (my LLC is the "contractor" , I am the sole employee of my LLC) Any retirement account would be self employed / self directed, whatever the term. However, since I'd be running it through my business, I can contribute the max as an employer match (though it would not be a Roth contribution from my company)

I am saving around 6k/month and right now it's just sitting in a standard brokerage account.

I would like to start putting it into retirement accounts that can offer tax benefits- whether the benefit is now (lower tax bill @ 33% marginal rate) or later (I'm 25 so compounded growth would be huge)

I'm considering contributing the max (17,500) to Roth 401k and doing an employer match of 17,500 as a non-Roth contribution. Then put the rest into a traditional brokerage account, maybe a little into an HSA/FSA if needed. I don't know of any other options for investing/saving that will reduce my tax burden (now or later)

I would welcome any suggestions, especially from those of you who are self-employed!
Post Wed Jan 08, 2014 6:18 am
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oldguy
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How about a Simplified Employee Pension Individual Retirement Account? SEP IRA. They are designed for self-employed, they work like a Traditional IRA (age 59 1/2, age 70 1/2, etc), except that the annual contribution limit is $49,900 rather than $5000/yr.

Thr Roths that you mention are not tax-deferred, they won't hepl your present tax situation.

You could invest up to $4166/m (of your available $6000/m). If you use a SP500 Index (historic longterm average return 11%) that would be about $3,500,000 20 years from now. Also, you should maintain the standard taxable brokerage account, maybe at a no-load fund company such as Vanguard or Fidelity - agine, use a SP500 Index Fund. That grows tax-deferred, yet gives you immediately availble cash for per-59 1/2 retirement, business expansions, etc.
Post Wed Jan 08, 2014 1:36 pm
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Retire_early
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Thank you for your post. I will look into SEP IRA, I thought they cost quite a bit to maintain but from a quick glance it sounds like they are not expensive.
Post Wed Jan 08, 2014 5:34 pm
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coaster
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ditto the recommend for a SEP; look into one of the discount online brokers or major investment companies holding it; should cost you less.

~Tim~
Post Thu Jan 09, 2014 5:30 am
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frugalasiandude
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I also second agree that SEP IRA. I would defintely look into that.
Post Tue Jun 17, 2014 2:11 am
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liwern
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Wow what an achievement at such an age! I'd advise to hedge some of your retirement savings in precious metals as paper money loses its value over time, what with the inflation and all. On the other hand, precious metals like silver and gold can act as a hedge in the event of any collapse. You can hit me up to know more as I work as a retirement fund advisor, or you could simply pay a visit to www.goldiraguardian.com.
Post Sun Jun 22, 2014 8:29 am
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Wino
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liwern is a spammer. He only posts "invest in gold" posts. Ignore him until he changes.
Post Sun Jun 22, 2014 9:04 am
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liwern
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Not sure how you came to that conclusion. My expertise and interest is on retirement topics specifically on precious metals, does that make me a spammer if I only post to topics regarding gold? If you noticed I have also posted something in the introduction thread. Thanks.
Post Mon Jun 23, 2014 5:53 am
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oldguy
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Oh please - did you really think that you could post this - """"Well if you are looking for hassle free, and less stress to deal with, I'd recommend to invest your savings or 401Ks in gold. There are plenty of gold rollover companies out there but the one we use is very reliable. You can check out xxx or hit me up for more information. """" - and no one would notice that you are a spammer??
Post Mon Jun 23, 2014 5:04 pm
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louiefrias
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Here's my advice...  Reply with quote  

Buy and read "Tax Free Retirement" by Patrick Kelly.

Then you'll be totally ready to make solid choices for your retirement.
Post Wed Oct 05, 2016 9:02 pm
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