Corey Grusden home

401K as a business owner

If you own a business, you can setup a SEP-401k for yourself (and employees too, if you want). The details of a SEP 401k are on the IRS website here

The gist is, you can contribute up to 25% of your annual income instead of the lesser limits of a “normal” 401K offered by most companies that people hear about or participate in.

That 25% has a max, too. In 2023, the max you’d be able to put in is 66,000$USD, which is significantly higher than a regular 401K that employees participate in that caps out around $22,500 for the year in 2023 (per the IRS).

So the benefit of being the owner of a business, solo or not, you can sock away almost 3x the regular amount as you would being an employee somewhere.

Granted, you’ll need to make an income of at least $264,000 to touch the max 25% contribution. It’s still better than 22,500$ max.

I love SEP’s.