MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

The 3rd Tax Day of Christmas: The Solo 401(k)

26 Dec 2019 · 1 min

Watch on YouTube

1:02

In this brief video Mark Kohler explains why a Solo 401(k) is an especially powerful retirement‑savings vehicle for solopreneurs—entrepreneurs who have no full‑time employees. He emphasizes that if the plan is established by December 31, the contribution amount can be chosen based on the owner’s compensation and the tax deduction is claimed for the current year even if the actual funding occurs later. He notes the 2019 contribution limit of $19,500 (plus a catch‑up provision for those 55 and older) and warns against waiting until the last minute to set up the plan, urging viewers to act promptly rather than calling a provider on December 30. The overall message is that a Solo 401(k) can provide a much larger tax write‑off than an IRA when set up before year‑end.

Chapters

On the third day of Christmas my true love gave to me a 401k. Now wouldn't it be awesome if it was just packed with cash too? But maybe it's the gift of a structure of a 401k. Now that's right before year end if you want a huge write off three or four times what you could put in an IRA. The 401k is perfect for the solopreneur, meaning the entrepreneur with no other full time employees. You have part time employees. But this 401k is awesome because if you have it set up by December 31st, you can choose the dollar amount based on your compensation and tax tip number one. But we want to nail that dollar amount that makes sense for you. And you don't have to put the money in the 401k until next year, but you get the write off this year. Now this year it's up to 19,500 with a makeup provision if you're over age 55. So we want to get in there and see if this is going to be a good fit and and get it structured before December 31st. And don't call your provider on December 30th. You want to get on this right away. Merry Christmas.