Day 6 – Max Out Your Retirement Plan Contribution
Who would you rather pay, yourself or the government? We’re willing to gamble that you chose yourself. If you did, then one of the easiest moves you can make is to increase your retirement savings via a deductible contribution. If you are part of an employer plan (i.e. 401k, 403b, etc.), you should consider increasing your deductible contribution to your retirement account (maximum salary deferral for 2019 is $19,000).
If you are self-employed, you are really in the driver’s seat as to how much you are able to deduct now, in order to save for your future retirement. As a sole-owner, with no employees, it is much easier to reach the annual maximum retirement contribution levels (employee/employer maximum for 2019 is $56,000) and super-charge your retirement savings, while also reducing your current tax burden. However, it is imperative that you consult with your accountant, not only on which type of account might be best for you (i.e. a SEP IRA, or possibly a Solo 401k), but more importantly have your accountant help you determine the maximum amount you are allowed to put into your retirement account on an annual basis.
*NOTE: You can make payments on your 2019 contribution in 2020. Speak to your plan provider, accountant, or financial advisor for more information.