If you are self-employed or a contractor at a hospital, here are three accounts that you should consider setting up.
Solo 401(k) or Individual 401(k) for the Self-Employed
I like the Solo 401(k), also known as the Individual 401(k), because it offers the most flexibility. You get an employee and employer contribution totaling $55,000. Plus, there is an employer contribution of 20% of the net profits up to $36,500.
Employee contributions are up to $18,500 if you’re under 50 years old, or $24,500 if you’re over 50.
If you can get your taxable income below $315,000, you may want to split that between pre-tax and Roth contributions.
Contribute to a Roth IRA
A Roth IRA is a retirement account funded with post-tax money. You can’t deduct it on your income taxes, but future withdrawals are tax-free and penalty-free.
You might be phased out in making contributions depending on your income, so you’ll first have to make a non-deductable IRA contribution and then convert it later. Just be aware that there are certain restrictions. Consult with your accountant and advisor about this strategy.
Health Savings Account
If you’re purchasing your health insurance through the open market, then odds are that you probably have a high-deductible health care plan. If that’s the case, you can open up a health savings account, contribute to it and invest it in mutual funds.
All in all, you can contribute $60,000 to $70,000 each year, which will put you in a really good spot for retirement.
Do you need help preparing for retirement? Contact me today to set up an initial meeting. You can also download my free ebook for physicians for tips and information about getting your finances on track.