As an entrepreneur or business owner, setting up a 401(k), SEP IRA, SIMPLE IRA or other type of qualified plan can help provide you with more tax-advantaged opportunities to plan for your own retirement while also providing benefits to attract and retain employees. You can even set up a retirement plan through your business if you are self-employed. You can choose between traditional (pre-tax) contributions to lower your taxable income or Roth (after-tax) contributions for tax-free growth and withdrawals in retirement.
Employer-sponsored 401(k) plans allow employees to contribute up to $23,500 in 2025, with those age 50 and older eligible for catch-up contributions of $7,500, and those aged 60-63 able to contribute an enhanced catch-up of $11,250, totaling up to $34,750. (This means eligible business owners and employees can reduce taxable income by as much as $34,750 annually if they choose pre-tax contributions.) For small businesses with 100 or fewer employees starting a 401(k) for the first time, valuable tax credits are available for the first three years. You can also deduct plan management expenses and matching contributions made to employees’ accounts.
If you choose after-tax Roth contributions, you will have to pay income taxes in the year you put funds in your Roth plan, but you will not owe taxes on gains, you will not have to withdraw RMDs (required minimum distributions) in retirement, and your heirs will not have to pay income taxes either as long as the Roth account has been in place for five years or longer and all rules are followed. Let’s talk about your group retirement plan!
Our Services
At Connect Tax and Wealth Management, we seek to provide each client with a comprehensive approach that allows you to simplify your life and make one phone call to manage almost everything related to your finances. Here are just some of the services we may provide as part of your custom financial and tax plan. Be sure to reach out to us for a complimentary conversation to discuss your life and financial goals and how we might help you reach them.
