A financial industry expert with over 20 years of experience, Cubby Bice serves as the president of Bice Wealth Management, a full-service financial consulting firm in Mooresville, North Carolina. Cubby Bice offers clients a wide range of financial services, including tax planning, investment planning, and business retirement plan implementation.
One of the common retirement plans for small business owners is the individual 401(k). Small business owners who are self-employed and have no full-time employees other than their spouses can open individual 401(k) plans to maximize their retirement savings. Once the plan has been set up, the business owner (employer) can contribute up to 25 percent of their compensation into their account, as long as the contribution does not exceed a particular amount. The threshold amount is $66,000 for the 2023 tax year.
An employee can defer up to 100 percent of their compensation in an individual 401(k) plan as long as the deferred compensation does not exceed a certain amount ($22,500 for employees who are less than 50 years old, and $30,000 for employees who are 50 or older). Employees can also make pre-tax and after-tax contributions to their individual 401(k) accounts. Both the plan sponsor (employer) and employee/partner can’t exceed a certain amount of aggregate contribution for each tax year.
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