re: Best small business retirement account contribution rate for President/ owners?

quote:

---

In your $100k example you could actually contribute more to a 401k than you could to a SEP. the employee could contribute $23k or $30,500 if 50+. Employer could also make contributions as a percentage of income for employees. You could make it something like 10% and put more into 401k than you are into the SEP. You could also just keep your SEP maxed out and do the same for your employee.

---

Good stuff. I do a $1,000 transfer monthly and then look everything over with my CPA before filing to determine my final transfer. So I’m just trying to remember now all my rules and limitations. I don’t think there’s any reason for me to continue my SEP and frankly shouldn’t have done it this year for the reasons you pointed out. Thank you.

Given that, I’m going to run some numbers you can do a 401(k) and Roth 401(k) at the same time. Again you’d think there’d be a damn spreadsheet for this….but if I can reasonably hire someone for what I pay myself, then why would I W-2 myself more and take fewer distributions just for retirement fund ability?

Seems like maybe I should offer a 7-10% employer match and do a personal contribution in the 401(k) up to the employer match, and then maximize the employee contribution to the limit in the Roth? The way I see it is the Roth is coming from my ‘distributions’ basically so somewhat lower taxes, additionally greatly reducing my tax bases at retirement potentially?

Another note, if personal contributions to a 401k are maxed at $23,500 how do you hit the maximum of $66,000 allowed with combined employer contributions? How do you get the missing $19,000 ($66,000-($23,500x2))? I’m missing something I know?

ETA: Finally found this online, so I can contribute after tax? I guess you get tax free growth, is there any other reason to do this into a retirement account?

Depending on your plan, you may be able to contribute up to the total employee and employer contribution limit for the year, provided your existing employee and employer contributions do not exceed the limit. For example, if you were under 50 and contributing $23,000 and your employer was contributing $20,000 in 2024, you could contribute up to an additional $26,000 as after-tax contributions to bring your total to $69,000. "