Solo 401k vs SEP IRA 2021 (Self Employed Retirement Plans). In this video I explain the 2021 SEP IRA and 2021 Solo 401k (also known as the self employed 401k) and compare the differences between the two of them. Until the early 2000's the SEP IRA was one of the most popular retirement accounts for anyone with 1099 income, self employed, small business owners, and the like. However, since then, for most people that are self employed and do not have any additional employees the Solo 401k has many more advantages over the SEP IRA.
If you continue to grow your business and start hiring people you will want to revisit your qualified retirement plan options and reconsider the SEP IRA & Solo 401k options.
2021 SEP IRA annual contribution limit is $58,000.
- 20% contribution for Sole Proprietors & Single Member LLC's
- 25% contribution for S-Corps & C-Corps
- NO borrowing provisions for SEP IRA's
- NO Roth Provision
2021 Solo 401k annual contribution limit is $58,000.
- Solo 401k Contributions: up to $19,500
- plus an additional 20% or 25% depending on how you file your taxes. (20% for Sole Proprietors & Single Member LLC's...25% for S-Corps and C-Corps).
- Borrowing Provision - up to 50% of account balance (up to $50,000 max)
- Roth Provision allowed.
Hope you enjoy the video and find a nugget or two of information to help you on your financial planning journey.
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OTHER VIDEOS YOU MAY LIKE
➡️ 10 Self Employed Tax Write-Offs: https://youtu.be/xz3N9wXPcxc
➡️ Backdoor Roth IRA Conversion EXPLAINED: https://youtu.be/AYo1FmwW3GM
➡️ Roth IRA Conversions EXPLAINED: https://youtu.be/Hzq9bcFnY0Q
➡️ 2021 Tax Brackets & Retirement Limits: https://youtu.be/CUniy-FZ2sY
➡️ 2020 Retirement Account Limits: https://youtu.be/KwyME2yA3_8
➡️ Tax Rates: Marginal vs Effective Tax Rates: https://youtu.be/yVHk9obdti8
➡️ Tax Bracket Management: https://youtu.be/L6lMJd2dXn0
➡️ 401(k) - Roth 401k vs Pre-Tax 401k: https://youtu.be/4lfnZ4ba1kc
➡️ 401(k) - How Aggressive Should it be: https://youtu.be/FSuJdc-Tw24
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Timestamps / Chapters:
0:00 - Intro
1:16 - The Basics
2:18 - Income Under $125,000
3:13 - Small Business Owners
4:32 - 2021 SEP & Solo 401k Contribution Limits
5:02 - Example
6:31 - Should I File as an S-Corp?
8:13 - Vanguard SEP IRA & Solo 401k
9:06 - Additional Solo 401k Advantages
10:39 - Form 5500 for Balances over $250,000
11:47 - Growing Business
ABOUT ME 👇
I've been involved in people's financial decisions for 15+ years (7 yrs Real Estate experience & 8+ yrs as a former Financial Advisor)...I now bring the financial successes, mistakes, failures, and best financial habits/tips to you through these videos.
My mission is to bring Financial Awareness to the forefront of your daily decisions so you can: improve your quality of life, increase your net worth, and grow upon your financial literacy. My videos are a reflection of my real-world experience as a real estate investor, stock market investor, student of finance, entrepreneur, and of course...my experience as a Former Financial Advisor.
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