IRA Financial’s Adam Bergman Esq. discusses a provision in SECURE Act 2.0 that now allows SEP IRA and Solo 401(k) employer profit sharing contributions to be made in Roth.
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About IRA Financial:

IRA Financial was founded by Adam Bergman, a former tax and ERISA attorney who worked at some of the largest law firms. During his years of practice, he noticed that many of his clients were not even aware that they can use an IRA or 401(k) plan to make alternative asset investments, such as real estate. He created IRA Financial to help educate retirement account holders about the benefits of self-directed retirement plan solutions.

IRA Financial is a retirement account facilitator, document filing, and do-it yourself document service, not a law firm. IRA Financial does not provide legal services. No attorney-client relationship exists between Client and IRA Financial Group, its management, salespersons or IRA Financial’s in-house legal counsel. IRA Financial provides IRA retirement facilitation service and CANNOT provide Client with legal, investment, or financial advice. Prior to making any investment decisions, please consult with the appropriate legal, tax, and investment professionals for advice.

IRA Financial is not engaged in rendering legal, accounting or other professional services. If legal advice or other professional assistance is required, the services of a competent professional person should be sought. (From a Declaration of Principles jointly adopted by a Committee of the American Bar Association & a Committee of Publishers and Associations.). The scope of Professional Services does not include the costs of any custodian related services….(read more)

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The IRS has recently made changes to the rules governing SEP IRA and Solo 401k Roth accounts, and it’s important for individuals to understand these changes in order to make the most of their retirement savings. The new rules have implications for contribution limits, tax treatment, and withdrawal rules, and being informed about them can help individuals maximize their retirement savings and minimize their tax burden.

One of the key changes for SEP IRA accounts is the increase in the contribution limit. The IRS has raised the annual contribution limit for SEP IRAs from $57,000 to $58,000 for 2021. This means that self-employed individuals and small business owners can now contribute up to $58,000 or 25% of their net earnings, whichever is less, to their SEP IRA accounts. This increased limit provides an opportunity for individuals to save more for retirement and reduce their taxable income.

Another important change to the rules for SEP IRAs is the ability to make catch-up contributions for individuals aged 50 and older. The new rules allow individuals to make additional catch-up contributions of $6,500 for 2021, enabling older workers to boost their retirement savings and potentially lower their tax liability.

In addition to the changes for SEP IRAs, there are also new rules for Solo 401k Roth accounts that individuals need to be aware of. The IRS has made changes to the rules governing Roth contributions to Solo 401k plans, allowing for greater flexibility in retirement planning.

One of the most notable changes to the rules for Solo 401k Roth accounts is the ability to make after-tax Roth contributions. Under the new rules, individuals can now make after-tax Roth contributions to their Solo 401k plans, in addition to traditional pre-tax contributions. This provides a valuable opportunity for individuals to take advantage of tax-free growth and tax-free withdrawals in retirement.

Another important change for Solo 401k Roth accounts is the ability to convert pre-tax funds to Roth funds within the plan. This means that individuals can now convert pre-tax funds in their Solo 401k account to Roth funds, allowing for tax-free growth and tax-free withdrawals in retirement. This option provides individuals with greater flexibility in managing their retirement savings and can potentially result in significant tax savings over time.

It’s important for individuals to stay informed about the rules governing SEP IRA and Solo 401k Roth accounts in order to make the most of their retirement savings. By understanding the new rules, individuals can take advantage of the increased contribution limits, catch-up contributions, and flexibility in Roth contributions and conversions, enabling them to build a more secure financial future. Consulting a financial advisor or tax professional can also provide valuable guidance on how to leverage these new rules to maximize retirement savings and minimize tax liability.