Susan asked 2 years ago
I’ve listened to enough of your podcasts to not eat up your time dolling up the question. But thank you, I love it, and not certain how you make the time for all you do.
Multiple strategies seem to surround the higher wage earner but I would like to learn of strategies for the lower wage earner. For example: a sole proprietor, over 50, with no employee earning a modest living with but not enough to merit an S-Corp. There is reasonable passive rental income in the mix.
Scenario:
AGI around $47K a year
21K Net on Schedule C
29K Net Schedule E
Roth IRA with catch-up is maxed. So what other strategies are available? The best I can tell….
SEP is based on net business income so that pencils out to around $5,250. (pre-tax then can we convert to Roth?)
Solo 401K – Does a sole-proprietor (not S-Corp) even qualify? If so, what is considered compensation? Strictly schedule C net With the example of a business that netted $21K the employee could contribute 100% of compensation (over 50 catch up applies). But what about employer 25% [cash available]
HSA seems sticky too. With a health insurance policy eclipsing deductible limits but seemingly the policy is not listed as Hdhp. Perhaps due to Affordable Care Act Coverage or some other unknown disqualifier.
Short of opening a new Roth IRA under an elderly parent’s name what other options are available?
Should my question be selected for the podcast you likely would not read this next part. I am on the waiting list with Kohler & Eyre and have followed up a few times. Sadly, my CPA of over a dozen years broke up with me when he retired last year and now I’m earnestly waiting for Jeri to swipe right on my name. I have many questions and understand that a CPA should be my resource to assess maximum qualifying contribution options. But while I wait, I don’t want to compound the issue by overfunding a a retirement account and being penalized. Or worse, watch available cash evaporate.