How the Wealthy Grow Extra Cash Tax-Free

Now once you save on taxes and you have more disposable income, what do you do with that extra cash? Well the wealthy just don't spend it on a new BMW or Range Rover. They funnel it into a retirement account that grows tax free or tax deferred. Here's where the wealthy play a different game. They don't just save on taxes today, they use their S Corp to create another vehicle for building wealth tomorrow. Enter the solo 401k. Now here's how it works. You as the employee can Defer up to $30,000 per year or more based on your age from your S Corp salary. Now that could be in the form of a Roth contribution or a traditional contribution. Then your S corporation which is your company as employer can match that contribution on top of that and that contribution could take you well over $70,000 in total 401k contributions. This means you could be putting away tens of thousands of dollars every year building wealth in a bucket the IRS can't touch until retirement or not at all.