S Corporation Retirement Options

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trfie
Posts: 180
Joined: Wed Feb 04, 2015 12:35 am

S Corporation Retirement Options

Post by trfie »

I have an S corp for my business (US - not sure if other countries even have S corps), am the only member, and would like to reduce my taxes. I have done everything I can outside retirement accounts. Seeing as I am both looking at taxes + FIRE, and may reach FI this year or the next (or later, a lot of unpredictable factors in my situation), this puts me in a different position than most ppl.

What do you recommend for options? I don't know much about the subject and it has not been so easy to find clear, understandable information online or in books.

Are there any options that allow me to pull out the money early without paying penalties?
I do not know if my income will be higher or lower at age 65 than it is now (that is a few decades away and I might have significant appreciation of stock which would produce income).
If there are no loopholes to pull out the money early, I am okay with leaving it there until 65 and when I hit my overall net worth goal for FI, I can get some income-producing side jobs to make up for the inaccessible money.

Qazwer
Posts: 146
Joined: Thu May 16, 2019 6:51 pm

Re: S Corporation Retirement Options

Post by Qazwer »

I think you need to step back and learn about taxes in general. As an S Corp (assuming that is your optimal structure - might have to determine that too), you are an employer and employee. If it us a single person, then you should look into solo 401k. They can either allow regular contributions, Roth and even mega back door Roth. Withdrawal penalties may or may not matter for regular contributions depending on tax rates. Also depending on tax rates over time up to retirement age, you can convert regular contributions to Roth.

https://www.madfientist.com/how-to-acce ... nds-early/

Goes over how to access funds early

trfie
Posts: 180
Joined: Wed Feb 04, 2015 12:35 am

Re: S Corporation Retirement Options

Post by trfie »

Thanks, those are some super helpful points, I will look into those options and the link.

My CPA mentioned SEP and SIMPLE-IRAs as options, would those be less recommended? And do you know if I can have one for one year and a different one for the next year?

I was thinking about hiring someone to advise on these accounts and maybe set them up (not sure what the cost would be), but maybe I can read up on it and after I decide what to do, it shouldn't be too difficult to have them set up at one of my current financial institutions.

Qazwer
Posts: 146
Joined: Thu May 16, 2019 6:51 pm

Re: S Corporation Retirement Options

Post by Qazwer »

It matters if you have employees or not. If it is a single person company, then setting up a solo401k is really easy. It can put away more money than a sep.

https://obliviousinvestor.com/solo-401k ... alculator/

trfie
Posts: 180
Joined: Wed Feb 04, 2015 12:35 am

Re: S Corporation Retirement Options

Post by trfie »

Yes, single person. Thx for the info.

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