First Payday Social Security Tax Increase Expected to Increase Interest in Individual Solo 401(k) Plan, According to IRA Financial Group Tax Attorney

Share Article

Friday, January 11 was the first big pay day of 2013 which included a 2% higher social security tax.

Higher Social Security Taxes in 2013 - Impact on Solo 401(k) Plan

Establishing an individual retirement account in 2013, will allow an individual to save more for retirement by adding tax-deferred funds on an annual basis as well as allowing the tax-deferred assets more time to grow

For many Americans workers, Friday January 11, 2013 was the first big pay day of 2013 which included a 2% higher social security tax. What this means for most Americans workers is less disposable spending money. For example, if an employee makes $50,000 a year, he or she will see $40 less per paycheck. If the employee makes $30,000 a year, he or she will see $25 less per pay period. “The higher social security taxes means that a significant percentage of Americans will have less after-tax funds to use as a source of personal savings,” stated Adam Bergman, a tax attorney with the IRA Financial Group. “As a result, we have seen an increasing number of individuals looking to establish individual 401(k) plan or self-directed IRA retirement structures in order to enhance their retirement savings, according to Mr. Bergman.

Under the 2013 new Solo 401K contribution rules, a plan participant under the age of 50 can make a maximum employee deferral contribution in the amount of $17,500. That amount can be made in pre-tax or after-tax (Roth). On the profit sharing side, the business can make a 25% (20% in the case of a sole proprietorship or single member LLC) profit sharing contribution up to a combined maximum, including the employee deferral, of $51,000, an increase of $1,000 from 2012.

For plan participants over the age of 50, an individual can make a maximum employee deferral contribution in the amount of $23,000. That amount can be made in pre-tax or after-tax (Roth). On the profit sharing side, the business can make a 25% (20% in the case of a sole proprietorship or single member LLC) profit sharing contribution up to a combined maximum, including the employee deferral, of $56,500, an increase of $1,000 from 2012.

“Although establishing a Solo 401(k) Plan will still require an employee to pay the increased social security tax on their payroll; earnings, having a solo 401(k) Plan or self-directed IRA will allow the employee to contribute additional savings into a tax-deferred account, “ stated Maria Ritsi, a senior paralegal with the IRA Financial Group. “Establishing an individual retirement account in 2013, will allow an individual to save more for retirement by adding tax-deferred funds on an annual basis as well as allowing the tax-deferred assets more time to grow,” stated Ms. Ritsi.

“With a majority of Americans behind on their preparation for retirements couples with higher social security taxes, individuals are beginning to focus on building a tax-deferred retirement account to help for their retirement, “ stated Ms. Ritsi.

IRA Financial Group’s Solo 401K Plan is the ultimate tax-free retirement solution for the self-employed. With federal and state income tax rates expected to increase in the future, gaining the ability to generate tax-free returns from your retirement investments when you retire is the last surviving legal tax shelter. With a Solo 401K, also known as the individual 401K Plan, a plan participant can make almost any investment in a tax-deferred manner, including real estate, tax liens, precious metals, currencies, options, and private business investment. With IRA Financial Group’s Roth Solo 401K, an individual can live off the Roth 401K investment income tax-free or take a portion of his or her Roth 401K funds and use it for any purpose without ever paying tax.

The IRA Financial Group was founded by a group of top law firm tax and ERISA lawyers who have worked at some of the largest law firms in the United States, such as White & Case LLP and Dewey & LeBoeuf LLP.

IRA Financial Group is the market’s leading “Checkbook Control” Self Directed IRA and Solo 401k Plan Facilitator. We have helped thousands of clients take back control over their retirement funds while gaining the ability to invest in almost any type of investment, including real estate tax-free and without custodian consent!

To learn more about the IRA Financial Group please visit our website at http://www.irafinancialgroup.com or call 800-472-0646.

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Jaclyn Baily
Visit website