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Considering an SEP-IRA For Our Very Small Business
Posted on 12/18/22 at 10:31 am
Posted on 12/18/22 at 10:31 am
We own a small S-Corp. Wife passed away last year so I need to minimize flow thru income - will be first time in decades that I now have to file as single vs joint. I have one daughter and myself on payroll and this seems to fit our needs. The company can contribute up to 25% of earned income to the IRA.
So far I've looked at Fidelity and VanGuard.
Anyone with experience in this?
So far I've looked at Fidelity and VanGuard.
Anyone with experience in this?
5
Posted on 12/18/22 at 11:40 am to ValZacs
Not really sure what you're asking. I'm self employed and have a SEP-IRA with eTrade. It accomplishes what it's supposed to as a tax-deferred, income-reducing retirement vehicle.
Posted on 12/18/22 at 12:13 pm to ValZacs
all you have is owner profit sharing with A SEP. no loans. no catch up. no employee contributions.
a solo401k is better. I have one with checkbook control so i am the plan administrator and trustee. I can invest in what i want. it is not tied to only products offered by vanguard or fidelity. you can buy RE and all kinds of stuff.
The employee issue could mess you up with a solo401k other than a spouse.
LINK
LINK
a solo401k is better. I have one with checkbook control so i am the plan administrator and trustee. I can invest in what i want. it is not tied to only products offered by vanguard or fidelity. you can buy RE and all kinds of stuff.
The employee issue could mess you up with a solo401k other than a spouse.
LINK
LINK
This post was edited on 12/18/22 at 12:16 pm
Posted on 12/18/22 at 1:05 pm to jfw3535
Pretty much just asking if anyone has other options, like you are using eTrade.
Can't go the solo 401 route since I have a non-spouse employee on payroll. But, looking at other options for 2023 that may allow us to do so then.
Can't go the solo 401 route since I have a non-spouse employee on payroll. But, looking at other options for 2023 that may allow us to do so then.
Posted on 12/18/22 at 2:01 pm to ValZacs
We used the SEP-IRA in our business and reaped huge benefit to my wife and me as only employees of our company. We maxed out for a few years and built a strong tax deferred retirement package. I chose Vanguard.
Posted on 12/18/22 at 2:50 pm to ynlvr
Had an SEP-IRA for a couple of decades. Moved it to E-Trade over a decade ago. No restrictions to speak of and I'm still working at my over-ripe age.
Posted on 12/19/22 at 7:57 am to TDTOM
I have a day job that offers a 401k with no match. I don't like the investment options and on top of that, the firm itself charges 1% fees on balances throughout the year. So I've decided to stop contributing.
I'm already maxing out the Traditional IRA contributions and doing backdoor conversions to a ROTH IRA. So now I'm looking into the SEP IRA as well. I have a side gig and have a sole proprietorship set up for that income.
I would like to set aside 25% of that side gig income into a SEP IRA, and then when I do my rollovers each year, just move the entire traditional and SEP IRA balance into the ROTH.
Anyone see any issues with this plan?
I'm already maxing out the Traditional IRA contributions and doing backdoor conversions to a ROTH IRA. So now I'm looking into the SEP IRA as well. I have a side gig and have a sole proprietorship set up for that income.
I would like to set aside 25% of that side gig income into a SEP IRA, and then when I do my rollovers each year, just move the entire traditional and SEP IRA balance into the ROTH.
Anyone see any issues with this plan?
Posted on 12/19/22 at 8:57 am to ValZacs
quote:
Wife passed away last year
I'm sorry for your loss.
quote:
So far I've looked at Fidelity and VanGuard.
Anyone with experience in this?
Mine is with Vanguard. My wife's account is at Fidelity. Fidelity is so much better than Vanguard.
Posted on 12/19/22 at 10:27 am to Billy Blanks
Thank you, Billy.
Looking closer at Fidelity.
Looking closer at Fidelity.
Posted on 12/19/22 at 11:31 am to Bacchus
quote:
I'm already maxing out the Traditional IRA contributions and doing backdoor conversions to a ROTH IRA. So now I'm looking into the SEP IRA as well. I have a side gig and have a sole proprietorship set up for that income.
I would like to set aside 25% of that side gig income into a SEP IRA, and then when I do my rollovers each year, just move the entire traditional and SEP IRA balance into the ROTH.
Anyone see any issues with this plan?
You're going to have to pay taxes on some amount of the conversion, at least the sep-ira portion... seems like having a Sep-ira AND trying to do a backdoor conversion would be messy. Any reason why you're doing a sep ira? You could just open a solo401k that has a roth option if you're just wanting to do it that way. At least don't have to worry on if there will be issues continuing to do the backdoor roth.
Posted on 12/20/22 at 7:56 am to Puffoluffagus
quote:
You're going to have to pay taxes on some amount of the conversion, at least the sep-ira portion... seems like having a Sep-ira AND trying to do a backdoor conversion would be messy. Any reason why you're doing a sep ira? You could just open a solo401k that has a roth option if you're just wanting to do it that way. At least don't have to worry on if there will be issues continuing to do the backdoor roth.
Good point. I didn't know too much about retirement options for entrepreneurs to be honest, but it seems the Solo 401k would be the best option in my case. Thanks for bringing it up!
Posted on 12/20/22 at 8:13 am to Fat Bastard
quote:
solo401k
I had one with fidelity.
It allows you to do “employee” and “employer” contributions.
It’s worth looking into.
Posted on 12/20/22 at 8:47 am to ValZacs
Idk what advice you’re asking?
I do a Sep ira. I can put 60k away which is more than pretty much any other option without having to pay fees.
I go through fidelity. It has access to all stocks/funds I wish to invest in
Definitely a no brainer for my situation.
I do a Sep ira. I can put 60k away which is more than pretty much any other option without having to pay fees.
I go through fidelity. It has access to all stocks/funds I wish to invest in
Definitely a no brainer for my situation.
This post was edited on 12/20/22 at 8:48 am
Posted on 12/20/22 at 10:43 am to makersmark1
quote:
I had one with fidelity.
It allows you to do “employee” and “employer” contributions.
It’s worth looking into.
ummmm yeah i know, i have one. with checkbook control. not with some damn brokerage with limited investments. get a bank account with it and do what you please.
Posted on 12/20/22 at 1:48 pm to ValZacs
Just remember you have to pay yourself w2 wages ( and associated taxes) thru the small business to do the SEP.
Posted on 12/20/22 at 2:31 pm to 1609tiger
I have mine through Schwab and I'm very happy with them. Schwab has a bank and you can get a CC/ Debit card. I'm assuming the others you can too? Its nice to be able to have one place you can check multiple accounts and schwab is very cheap. But I'm assuming Fidelity and Vanguard are cheaper? Not sure on Etrade I'm sure they are fine.
Posted on 12/20/22 at 3:45 pm to 1609tiger
it can be based on net profits, less half ss/fica taxes. doesn't necessarily have to be reported on w-2. however, we are a w-2 employer so it does simplify determining what income to apply the % to.
Posted on 12/20/22 at 7:11 pm to Fat Bastard
quote:
not with some damn brokerage with limited investments
The account I had, I could buy any investment. Stocks, bonds, mutual funds, etc.
from fidelity: “ A Fidelity Investments Solo 401k brokerage account with checkbook control from My Solo 401k Financial is ideal for those looking to still have the option to invest in equities while also gaining checkbook control over their retirement funds for investing in alternative investments such as real estate, notes, tax liens, and private shares in addition to processing a solo 401k participant loan.”
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