https://www.activefinancialgroup.com

Financial and Retirement Investment Planning

SMALL BUSINESS SOLUTIONS

As small business owners become more successful, they look for waysto reduce their tax burden. One of the most popular ways to reducetaxes is with a SEP IRA. This is the most “used” and popular option, oneof which is highly recommended by CPA’s. While the SEP IRA is thesimplest and easiest to set-up, it does not necessarily provide the besttax advantages.Certain plans, such as a Solo-401 can provide a better tax benefitwithout adding any additional cost or complexity. In some cases, a Solo-k can offer much more flexible and “liquidity” to the owner for his/hersbusiness growth, which is just not possible in a SEP.In some cases, a change to the corporate structure can open additionaloptions as well. You need the right Financial planner and smallbusiness retirement specialist who has the right experience andexpertise with a proven track record to help guide you through thatprocess. Let AFG, along with the approval from your CPA determine atax strategy that works for you and your company. Have the smallbusiness experts at AFG put a plan in place to help you achieve yourcurrent and future goals.

SMALL BUSINESS SOLUTIONS

Want more information, please call, or use our contact page for yourfree consultation today!Small business owner retirement strategies1. Traditional or Roth IRABest for: Those just starting out or saving less than $6,000 a year. If youare leaving a job to start a business, you can also roll your old 401(k)into an IRA.IRA contribution limit: Up to $6,000 in 2020, plus a $1,000 catch-upcontribution for those 50 or older.Tax advantage: Tax deduction on contributions to a traditional IRA; noimmediate deduction for Roth IRA, but withdrawals in retirement aretax-free.Employee element: None. These are individual plans. If you haveemployees, they can set up and contribute to their own IRAs

SMALL BUSINESS SOLUTIONS

2. Solo 401(k)Best for: A business owner or self-employed person with no employees(except a spouse, if applicable).Contribution limit: Up to $57,000 in 2020 (plus a $6,000 catch-upcontribution for those 50 or older) or 100% of earned income,whichever is less. To help understand the contribution limits here, ithelps to pretend you’re two people: An employer (of yourself) and anemployee (also of yourself).In your capacity as the employee, you can contribute as you would to astandard employer- offered 401(k), with salary deferrals of up to 100%of your compensation or $19,500 (plus that $6,000 catch-upcontribution, if eligible), whichever is less.In your capacity as the employer, you can make an additionalcontribution of up to 25% of compensation.

SMALL BUSINESS SOLUTIONS

3. SEP IRABest for: Self-employed people or small-business owners with no or few employees.Contribution limit: The lesser of $57,000 in 2020 ($56,000 in 2019) or up to 25% of compensation or net self-employment earnings, with a $285,000 limit on compensation that can be used to factor the contribution. Again, net self-employment income is net profit less half of your self-employment taxes paid and your SEP contribution. No catch-up contribution.Tax advantage: You can deduct the lesser of your contributions or 25% of net self-employment earnings or compensation — limited to that $285,000 cap per employee in 2020 — on your tax return. Distributions in retirement are taxed as income. There is no Roth version of a SEP IRA.There is a special rule for sole proprietors and single-member LLCs: You can contribute 25% of net self-employment income, which is your net profit less half your self-employment tax and the plan contributions you made for yourself.The limit on compensation that can be used to factor your contribution is $285,000 in 2020.

SMALL BUSINESS SOLUTIONS

4. Simple IRABest for: Larger businesses, with up to 100 employees.Contribution limit: Up to $13,500 in 2020 or $13,000 for 2019 (plus catch-up contribution of $3,000 if 50 or older). If you also contribute to anemployer plan, the total of all contributions can’t exceed $19,500.Tax advantage: Contributions are deductible, but distributions in retirementare taxed. Contributions made to employee accounts are deductible as abusiness expense.Employee element: Unlike the SEP IRA, the contribution burden isn’t solelyon you: Employees can contribute through salary deferral. But employersare generally required to make either matching contributions to employeeaccounts of up to 3% of employee compensation, or fixed contributions of2% to every eligible employee. Choosing the latter means the employee doesnot have to contribute to earn your contribution. The compensation limit forfactoring contributions is $285,000 in 2020.

SMALL BUSINESS SOLUTIONS

5. Defined benefit planBest for: A self-employed person with no employees who has a high incomeand wants to save a lot for retirement on an ongoing basis.Contribution limit: Calculated based on the benefit you’ll receive atretirement, your age and expected investment returns.Tax advantage: Contributions are generally tax deductible, and distributionsin retirement are taxed as income. An actuary must figure your deductionlimit, which adds an administrative layer.

Office OneAddress: 1300 Ridenour Blvd, NW Suite 221 Kennesaw, GA 30152Email: team@activefinancialgroup.comPhone No: (678) 574-0080

Active Financial Group

Website: https://www.activefinancialgroup.com/

Office TwoAddress: 2207 Spalding Drive, Atlanta, GA 30350Email: Cstefan@activefinancialgroup.comPhone No: (770) 797-5788