Financial Advice for Self Employed

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FINANCIAL PLANNER
https//www.activefinancialgroup.com
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The only thing certain in life and business is
that it is continually changing. Managing that
change is becoming more challenging in todays
economy. We can make planning for your personal
or business future less stressful by building a
solid path to your financial goals. Effective
financial planning may seem overwhelming from
understanding your personal goals and values to
analyzing current investments, cash flow, debt,
income taxes, risk management needs and more. But
at Active Financial Group, we believe managing
your wealth strategy is more than just managing
your money. It is about developing a customized
financial strategy that is unique to you.
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FINANCIAL ADVICE FOR SELF EMPLOYED
1. Traditional or Roth IRA Best for Those just
starting out or saving less than 6,000 a year.
If you are leaving a job to start a business, you
can also roll your old 401(k) into an IRA. IRA
contribution limit Up to 6,000 in 2020, plus a
1,000 catch-up contribution for those 50 or
older. Tax advantage Tax deduction on
contributions to a traditional IRA no immediate
deduction for Roth IRA, but withdrawals in
retirement are tax-free. Employee element None.
These are individual plans. If you have
employees, they can set up and contribute to
their own IRAs.
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2. Solo 401(k) Best for A business owner or
self-employed person with no employees (except a
spouse, if applicable). Contribution limit Up to
57,000 in 2020 (plus a 6,000 catch-up
contribution for those 50 or older) or 100 of
earned income, whichever is less. To help
understand the contribution limits here, it helps
to pretend youre two people An employer (of
yourself) and an employee (also of yourself). In
your capacity as the employee, you can contribute
as you would to a standard employer- offered
401(k), with salary deferrals of up to 100 of
your compensation or 19,500 (plus that 6,000
catch-up contribution, if eligible), whichever is
less. In your capacity as the employer, you can
make an additional contribution of up to 25 of
compensation.
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3. SEP IRA Best for Self-employed people or
small-business owners with no or few
employees. Contribution limit The lesser of
57,000 in 2020 (56,000 in 2019) or up to 25 of
compensation or net self-employment earnings,
with a 285,000 limit on compensation that can be
used to factor the contribution. Again, net
self-employment income is net profit less half of
your self-employment taxes paid and your SEP
contribution. No catch-up contribution. Tax
advantage You can deduct the lesser of your
contributions or 25 of net self-employment
earnings or compensation limited to that
285,000 cap per employee in 2020 on your tax
return. Distributions in retirement are taxed as
income. There is no Roth version of a SEP
IRA. There is a special rule for sole proprietors
and single-member LLCs You can contribute 25 of
net self-employment income, which is your net
profit less half your self-employment tax and the
plan contributions you made for yourself. The
limit on compensation that can be used to factor
your contribution is 285,000 in 2020.
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4. SIMPLE IRA Best for Larger businesses, with
up to 100 employees. Contribution limit Up to
13,500 in 2020 or 13,000 for 2019 (plus
catch-up contribution of 3,000 if 50 or older).
If you also contribute to an employer plan, the
total of all contributions cant exceed
19,500. Tax advantage Contributions are
deductible, but distributions in retirement are
taxed. Contributions made to employee accounts
are deductible as a business expense. Employee
element Unlike the SEP IRA, the contribution
burden isnt solely on you Employees can
contribute through salary deferral. But employers
are generally required to make either matching
contributions to employee accounts of up to 3 of
employee compensation, or fixed contributions of
2 to every eligible employee. Choosing the
latter means the employee does not have to
contribute to earn your contribution. The
compensation limit for factoring contributions is
285,000 in 2020.
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5. Defined benefit plan Best for A self-employed
person with no employees who has a high income
and wants to save a lot for retirement on an
ongoing basis. Contribution limit Calculated
based on the benefit youll receive at
retirement, your age and expected investment
returns. Tax advantage Contributions are
generally tax deductible, and distributions in
retirement are taxed as income. An actuary must
figure your deduction limit, which adds an
administrative layer.
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Active Financial Group
Website https//www.activefinancialgroup.com
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Office One Address 1300 Ridenour Blvd, NW
Suite 221
Kennesaw, GA 30152 Email team_at_activefinancialgrou
p.com Phone No [phone]
Office Two Address 2207
Spalding Drive
Atlanta, GA 30350 Email Cstefan_at_activefinancialgr
oup.com Phone No [phone]