Retirement Planning - 401(k) Plans
I'm back because it is year end time. Today is an alert to pay yourself first. If you ONLY have a W-2 Hustle, my hope is that your employer give you benefits that allow you to contribute to a 401(k) type of plan. The goal is to do whatever it takes to make sure that you contribute the maximum amount to your plan. This is a big deal because it reduces your taxable income. Yep, if you're not maxing your contribution, you are basically paying extra in taxes in each year. It's also good to know how much your employer contributes via a matching program. Many companies match your contribution up to a capped amount of about 3%.
Solo 401(k)
For my independent contractors, entrepreneurs, and sole proprietors, you should have a Solo IRA / Solo 401(k) plan. The equivalent retirement plan to the 401(k) plan offered to W-2 hustlers. I'm not going to get into the specifics of how to sign up for one because its a whole post unto itself...but just know you enjoy the same benefits as your W-2 friends and more. For instance, the federal government allows you to provide a matching program just like "big" corporations do and trust me the matching is much better.
Maximum Contribution Limit: The contribution limit for any employee (W-2 or Independent Contractor) who participate in 401(k) plans has increased from $18,000 to $18,500 for the 2018 tax year. Source of Authority: IRS, check their website if you're unsure where to look.
Quick reminder to pay yourself first before the end of the year.
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