Best Retirement Plan Options For Solopreneurs

by | Oct 30, 2019 | Retirement, YouTube


One of the greatest benefits of being a small business owner or a solopreneur, is that the world is pretty much your oyster when it comes to retirement plan options for you and your business! Because there are so many different options out there, it’s hard to know which one is right for you!

In today’s video, we’re talking about the best retirement plan options for solopreneurs. You’ll learn:

  • The benefits of the HSA and why this is considered a powerful retirement savings option.
  • Why the solopreneur starter plan is headache free and how you can stair-step up to a bigger and better tax savings plan.
  • What the granddaddy stacking method of retirement plans is and how you can save more than $300,000 in 2019 alone!

Click here to watch the full video or read the full video transcript, below.

Best Retirement Plan Options For Solopreneurs

We’re going to look at solopreneur retirement starter plans all the way up to the granddaddy retirement plan method -stacking retirement plans. When you stack retirement plans, you can save over $300,000 this year alone for retirement. It’s a beautiful thing!

Solopreneur Retirement Plan Step 1:

Set Up A Health Savings Account (HSA)

With an HSA, you get tax deductible contributions and the great thing is, it grows tax free! Here’s where the triple benefit comes in – when you do decide to pull the money out, you don’t pay taxes on it! No other retirement plan offers that! Even better, if the money pulled out is used for qualified medical expenses, you get those tax benefits surrounding the HSA.

In 2019, if you’re setting up your HSA as a family, you can contribute $7,000. It’s half that if you set up the account for an individual. Additionally, if you’re over 50, you can put another $1,000 into your health savings account. The fact that you can let this money grow for you over time, is an incredible benefit.

With a health savings account, you can put the money in there and you don’t have to use it for medical expenses this year. You can set some of it aside and invest it so that it can grow. You can build up a lot of money in your health savings account that can be used for paying for healthcare expenses, which can be expensive later in retirement.

Solopreneur Retirement Plan Step 2:

Pick A Solopreneur Starter Plan- Traditional IRA or Roth IRA, SEP or Simple IRA

The next step, after you have your health savings account in place, is to start a traditional IRA or a Roth IRA. The beauty of these is that you don’t have any headaches related to your business because they’re just set up on the side like a regular investment account and they’re not associated with your business.

The drawback is, you don’t get a tax deduction through the business of doing matching contributions and the contribution rates are low. But if you’re only able to save a few thousand dollars a year in 2019, the limits are $6,000 a year if you’re under 50 and then another $1,000 if you’re over 50.

From there, you can graduate to either a SEP or a Simple IRA. As you save more money over time, you can grow and gradually work your way up to a 401k. Even if you establish a Simple IRA today, you don’t have to keep that plan going for the next 50 years. You can terminate that plan and then graduate to a 401k.

It’s important to know that you can kind of walk up the stairs here when it comes to your retirement plans. With the SEP or the Simple IRA, this is where you start to get tax deductible contributions matching from your business. And with the Simple IRA for example, you can put about twice as much, if not more, in certain circumstances into the Simple IRA. And then in addition to that, you put matching dollars in from the employer side as well.

Now if you have employees, this is where it starts to get a little bit sticky because you’ll also want to cover them, and you’ll have certain requirements around making sure that they are eligible and able to participate in this plan as well. But it’s tremendously beneficial for saving a little bit more if you want to save more for retirement

Solopreneur Retirement Plan Step #3:

Implement a 401K & Profit-Sharing Plan

If you want bigger and better tax deductions, you’ll want to implement a 401k plan. This is called a solo 401k and is extremely easy to administer. In fact, you don’t even have to file a tax return for a solo 401k until the assets get to $250,000.

As you add more people, 401ks can get more complicated because of the rules surrounding it. You can hire a third-party administrator to set up the plan and make sure that you’re in compliance every year, do all your testing and do all your tax filing forms for you. We’ve come a long way in that you can hire people for a reasonable cost to do all that for you, so you don’t have to worry about it.

A 401k allows you to save a boatload of money every single year for retirement with the combination of a 401k, a profit-sharing plan and matching dollars on that 401k money in 2019. If you’re over 50, you can put up to $62,000 in your 401k profit sharing plan. On top of that, we can stack on the cash balance plan, which I call the granddaddy stacking method. And if you do that, you can save more than $300,000 this year alone for retirement!

Which Retirement Plan Is Right For You?

Not sure which plan is right for you? If you’re a solopreneur, you’re in luck! I’ve been helping my clients answer that question for the last 12 years!

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Ashley helps business owners exit their business and retire with financial security. As a Certified Exit Planner she specializes in helping business owners navigate the maze of decisions that need to happen from full-time running their business to retirement.

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