If the following comment from your CPA sounds familiar to you, then your CPA is similar to most clients we talk with:
“Put money in your 401(k)/Profit Sharing Plan and pay taxes on the rest. If you want to take home more money, you need to make more money.”
We have found that very few CPAs are proactive when it comes to saving their clients money on taxes. Most CPAs simply process tax returns and are so busy that they do not have time to meet with individual clients to work on a true income tax reduction plan.
The traditional income tax reduction solutions are simple. This page gives you the basic information on a 401(k) plan.
A 401(k) Plan is a qualified retirement plan in which an employer permits an employee to defer receipt of part of his or her compensation by contributing that part to his or her account in the 401(k) Plan. This is a paycheck deduction for the employee and is completely voluntary. Typically, a company will have a match of some sort as a benefit to the employees. The match is typically 50 cents on the dollar up to 6% of pay, thereby capping any potential match at 3% of payroll. The maximum payroll deduction for 2016 was $18,000 with a $6,000 catch-up provision for those ages 50+, and in 2017 the deferral limit is also $18,000 with the same catch-up amount.
More Retirement Ideas
Defined Benefit Plans
Generally, a Defined Benefit Plan allows for much bigger deductions for employees who are getting a late start on their retirement planning.
Roth 401(k) Plans
A component of a “regular” 401(k) Plan; however, the funding of a “Roth” 401(k) Plan is with AFTER-TAX dollars.
News & Education
Years Go By
Planing for retirement is a bit like planning a vacation with one big difference. You generally only get one shot at getting is right.
Take the time to plan now, it will pay large dividends later in life and for future generations.