Roth IRAs and traditional 401K accounts are designed to enable people to save money in investment accounts by offering tax advantages. These retirement accounts were meant to replace the defined employer pension plans of the past. With a pension plan an employee received a defined payment every month from their employer based on years of…
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To understand the contribution limits, you need to remember that as a self-employed person, you are both employee and employer. The total solo 401k contribution limit for 2021 is $57,000 in 2020 and $58,000 in 2021 with an additional $6,500 catch-up contribution if you are 50 or older. Within that total contribution limit, there are…
Read articleCurrently, contributions to 401k or equivalent are “pre-tax”, directly reducing taxable income in the US. The deduction reduces taxes at a person’s highest marginal tax rate. The Bıdɛn administration claims this deduction benefits high income earners more than low income earners. (That is, someone at a 37% tax rate gets 37% benefit, while someone at…
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