In this episode Shannon is joined by financial planner and author Sean Mullaney to unravel the complexities of retirement accounts for business owners. They delve into an array of retirement investment options, from traditional and Roth IRAs to solo 401(k)s and SEP IRAs, shedding light on their features and suitability for entrepreneurs at varying stages of their business journey. Sean offers valuable insights into how these accounts work, their contribution limits, and potential investment strategies. Stay tuned for tomorrow’s episode, where they will further explore traditional versus Roth investments and strategies for optimizing your retirement savings. Whether you’re just starting your entrepreneurial journey or looking to maximize your retirement investments, this episode will provide you with the knowledge and guidance you need to navigate the world of retirement accounts and take proactive steps toward securing your financial future.

Sean Mullaney is a financial planner and writes The FI Tax Guy blog focused on the intersection of tax and financial independence. In 2022 he authored the book Solo 401(k): The Solopreneur’s retirement account.

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The discussion is intended to be for general educational purposes and is not tax, legal, or investment advice for any individual. Shannon and the Keep What You Earn podcast do not endorse Sean Mullaney, Mullaney Financial & Tax, Inc., and their services.

What you’ll hear in this episode:
04:33 Interest in origin stories, impact of personal finance.
09:23 Simple IRA: Modest contribution, limited use case.
11:39 Equal IRA contributions for all employees essential.
14:47 Annual tax form for business profit and plans.
18:26 Consider future implications when making current decisions.
22:23 Diversify solo 401k with large mutual funds.
26:21 Consider solo 401K for small businesses.

If you like this episode, check out:
How to Build Trust with Your Customers
Why Just Bumping Up Prices Doesn’t Cut It
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The information contained in this podcast is intended for educational purposes only and is not individual tax advice. Please consult a qualified professional before implementing anything you learn….(read more)

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Understanding retirement account Options with Sean Mullaney

Planning for retirement can be a daunting task, especially with so many different retirement account options available. It’s essential to understand the different types of retirement accounts and how they can fit into your overall retirement planning strategy. To help shed some light on this topic, we spoke with Sean Mullaney, a certified financial planner with over 15 years of experience in retirement planning.

Traditional 401(k) and IRA Accounts

One of the most well-known retirement account options is the traditional 401(k) and IRA accounts. These accounts allow individuals to contribute pre-tax dollars, which can help lower their taxable income in the present and save for retirement over time. Sean Mullaney explains, “Traditional 401(k) and IRA accounts are great options for individuals who are looking to save for retirement while also reducing their tax burden. These accounts offer tax-deferred growth, meaning you won’t have to pay taxes on your investment gains until you withdraw the funds in retirement.”

Roth 401(k) and IRA Accounts

In addition to traditional retirement accounts, there are also Roth 401(k) and IRA accounts. These accounts work in the opposite way as the traditional ones – individuals contribute after-tax dollars, and in return, the funds grow tax-free. When it comes time to withdraw the funds in retirement, individuals won’t owe any taxes on their contributions or investment gains. Sean Mullaney notes, “Roth accounts can be a great option for individuals who expect to be in a higher tax bracket in retirement, as they can take advantage of tax-free withdrawals later in life.”

Employer-Sponsored Plans

Many individuals have access to employer-sponsored retirement plans, such as 401(k)s, 403(b)s, and SIMPLE IRAs. Sean Mullaney emphasizes the importance of taking advantage of these plans if they are available. “Employer-sponsored plans often come with employer matches, meaning your employer will contribute a certain amount of money to your retirement account based on your contributions. This is essentially free money, and it’s crucial to take full advantage of these employer matching contributions.”

Self-Employed Retirement Plans

For self-employed individuals, there are retirement account options tailored specifically for them, such as Solo 401(k)s, SEP IRAs, and SIMPLE IRAs. These plans allow self-employed individuals to save for retirement and receive similar tax benefits as traditional and Roth accounts. Sean Mullaney advises, “Self-employed individuals should explore these retirement plans to maximize their retirement savings and take advantage of tax-deferred or tax-free growth.”

In conclusion, understanding the different retirement account options is essential for effective retirement planning. With the guidance of a certified financial planner like Sean Mullaney, individuals can evaluate their options and make informed decisions about which retirement accounts best align with their financial goals. Whether it’s traditional, Roth, employer-sponsored, or self-employed retirement plans, there’s a retirement account option for everyone. It’s never too early to start saving for retirement, and having a clear understanding of the available options can pave the way for a secure financial future.