Freelance Workers, Taxes, and Retirement Savings
No images? Click here By Brian Hershberg | April 25, 2021 Those pursuing early retirement face a tough challenge even when they have the trappings of full-time employment, such as 401(k) savings plans and taxes that are automatically taken out of pay. The challenge of achieving early-retirement goals is even tougher for those who are in freelance or similar work arrangements as they must pay taxes and save on their own. The latest On FIRE column—aimed at adherents of the financial independence/retire early movement—explores two ways for freelancers to limit their taxable income and save for retirement. The first looks at the benefit of changing business structure in the context of FIRE, and the second looks at solo 401(k)s as an option for self-employed workers to save for retirement as they do in corporate America.
Thompson goes on to explore the upside and possible pitfalls of single-member LLCs choosing to be taxed as S-Corporations, with the caveat that the best way for a freelancer to juice retirement savings would be through a tax-advantaged retirement account regardless of whether he or she seeks to incorporate and be taxed as an S-Corp. He likes solo 401(k)s best.
FIRE friends, if you have any questions about the process or ideas you’d like to learn about, please email us at retirement@barrons.com, and we may look to respond in a future piece. Solo 401(k)s and S-Corps Can Help Freelancers Juice Their Retirement Savings Older Americans Are Turning to Pot for Help With Ailments. Here's What to Know.Today's marijuana is more potent than it was when many seniors were younger, making it a challenge to get dosing correct when self-medicating. To Rent or Buy in Retirement? Here Are Some ConsiderationsWhile many seniors have been led to believe that renting is throwing away money, financial advisors say the decision on purchasing or leasing should be driven by a number of considerations, from cost to legacy to comfort. More Retirement Savers May Be Able to Claim a $1,000 Tax Credit This YearWorkers whose incomes took a pandemic hit could find themselves newly eligible to take the Saver's Credit to keep on saving in their 401(k) or IRA Yes, You Can Retire on Dividends. 10 Stocks for the Long Haul.The notion of using dividends for retirement income has plenty of appeal, with yields on many traditional income investments near historic lows and individuals increasingly on the hook for their postcareer income. Sign of Small-Business Strain: New Survey Shows Spike in Early Retirement PlansWilmington Trust found 8% of owners of businesses with under $5 million in revenue were considering early retirement, compared with half that last March. That figure is about 20% at larger businesses with revenue of more than $5 million, up from about 10% prepandemic. MEET THE 100 MOST INFLUENTIAL WOMEN IN U.S. FINANCE Barron’s is honoring women across the industry for their leadership, accomplishments, and contributions. The 2021 list includes Ann Miura-Ko, Penny Pennington, Ruth Porat, and more. New profiles will be published weekly—see the full list and read the newest profiles here.
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