Chances are your employer offers some type of retirement plan such as 401(K), 403(B) or TSP. These plans are very similar in that they are pre-tax, which means employee contributions to these plans reduce your taxable wages.
If you are self-employed, chances are you have or are considering one of the most popular small business retirement plans such as SEP IRA or Individual 401(K). These plans, just like employer-sponsored plans mentioned above, are pre-tax.
In our experience, not every client contributes enough to these plans to take a full advantage of the maximum allowable contributions. This results in missed opportunities to further reduce taxable income and tax due as a result. Davidoff & Associates offers a service that is designed to calculate an optimal amount of annual retirement plan contributions that achieves two goals – reduction of taxable income and an improved withholding optimization. Both of these lead to the reduction of overall tax burden and smarter money management.
While your employer will control the maximum allowable contributions, there may be no such control if you are self-employed. Do not attempt to handle SEP IRA, Individual 401(K) or any other small business retirement plan contributions on your own – you may not calculate the maximum allowable contributions correctly and as a result expose yourself to steep IRS penalties. Always check with Davidoff & Associates before making these contributions.
If you would like to embark on the optimization path, which we absolutely encourage you to do, please start by contacting us today to schedule a free assessment.