Summary of What This Blog Covers
- Five retirement strategies that also reduce taxes.
- Key moves: Solo 401(k), profit-sharing, Defined Benefit Plans, and catch-up contributions.
- Importance of rebalancing estimated tax payments.
- Real-life examples and why professional guidance matters.
The Deeper Question
Let’s start with a simple but powerful truth: retirement planning is not just about money. It is about peace of mind, the ability to sleep well at night, and the knowledge that your hard work will serve you long after the hustle of building a business has slowed.
Yet, as many entrepreneurs know, the connection between retirement planning and taxes often feels confusing. You want to save more, but the terms, rules, and contribution limits make you hesitate. You may have even searched for a “tax preparer near me” or sat across from an Austin tax accountant only to walk away still unsure of what to do next.
This is a story I hear often. The desire to save is there. The desire to reduce taxes is there. But the clarity is missing. And when clarity is missing, people delay. The danger is that every year of delay means lost tax savings and lost compound growth.
The good news is that retirement planning can be simple. You do not need to carry tax stress. The key is learning the moves that matter most, the ones that both grow your future and reduce your tax bill today.
1. Max Out a Solo 401(k)
A Solo 401(k) is one of the most overlooked opportunities for entrepreneurs, freelancers, and small business owners. It was designed for people like you, individuals who do not have large teams but want the benefits of a retirement plan usually reserved for larger corporations.
Why This Works So Well
In 2025, you can contribute up to $69,000 to a Solo 401(k). If you are over 50, you can add another $7,500 through catch-up contributions, raising the total to $76,500. That is not just money saved. It is money redirected from today’s tax bill into tomorrow’s security.
Unlike traditional employee plans, with a Solo 401(k) you can contribute both as the employee and as the employer. This means you can use two streams to reach your maximum contributions.
A Practical Example
Let’s imagine you run a consulting business that earns $130,000 this year. As the employee, you contribute $23,000. Then, as the employer, you contribute up to 25 percent of your compensation around $32,500. Suddenly, you have $55,500 saved for retirement, and you have reduced your taxable income substantially.
The Emotional Why
This is about more than saving. It is about claiming your worth. Entrepreneurs often prioritize reinvesting in the business, forgetting that their future self needs reinvestment too. A Solo 401(k) is your way of saying, “My future matters.”
A certified professional accountant or tax advisor near you can help ensure every contribution is optimized for your situation.
2. Add Profit-Sharing Contributions
Profit-sharing is the unsung hero of retirement planning. It allows you to add extra contributions in years when your business is thriving.
Why It Matters
- Employer contributions up to 25 percent of compensation are deductible.
- You can adjust the amount annually, depending on how your business performs.
- This gives you flexibility and reward in strong years without committing to amounts you cannot sustain in leaner ones.
A Practical Example
If you earn $200,000, profit-sharing could allow your business to contribute $50,000 into your retirement plan. That is $50,000 less taxable income and $50,000 more building future security.
The Emotional Why
Profit-sharing is symbolic. It is a way of letting your business success serve you directly. Too often, owners pour profits into growth but forget to celebrate their own stability. Profit-sharing lets you mark the milestone of a good year while ensuring the benefits ripple into your future.
Working with an Austin, Texas CPA or tax consultant near you ensures you calculate the right amounts and keep your cash flow balanced.
3. Evaluate a Defined Benefit Plan for High-Income Years
When your business reaches a stage of consistent profitability, a Defined Benefit (DB) Plan becomes an incredible opportunity. It is not just another retirement plan. It is a way to accelerate savings significantly while reducing your tax bill.
Why It Matters
- Contributions can exceed $100,000 annually depending on your age and income.
- It guarantees a set retirement benefit, giving you certainty.
- Contributions are fully deductible, providing powerful tax help in high-income years.
A Practical Example
James, age 55, owns a successful engineering firm. His income has been steady at $400,000 per year. By implementing a DB Plan, he contributes $150,000 annually. That contribution slashes his taxable income while rapidly building retirement wealth in the critical years before retirement.
The Emotional Why
A Defined Benefit Plan is a statement of stability. It says: “I have built something enduring, and now I am securing my future with the same care I gave to building my business.” For those closer to retirement, it is a chance to catch up, to close the gap, and to step into the next chapter with confidence.
DB Plans require actuarial calculations, so partnering with a licensed CPA or an Austin accounting service is essential to keep everything compliant and optimized.
4. Implement Catch-Up Contributions
If you are age 50 or older, the IRS gives you an extra gift: the ability to save more. These catch-up contributions are often overlooked but can make a meaningful difference.
Why It Matters
- Solo 401(k)s allow an extra $7,500 annually.
- IRAs allow an extra $1,000.
- Every dollar contributes to reducing taxable income or growing tax-free wealth.
A Practical Example
Taylor, age 52, has already maxed out a Solo 401(k) at $69,000. With catch-up contributions, Taylor adds another $7,500, for a total of $76,500. That extra contribution reduces taxable income today while compounding for tomorrow.
The Emotional Why
Catch-up contributions are about grace. They recognize that life is unpredictable. Maybe earlier years did not allow for saving. These provisions let you redeem the time and prioritize your retirement when you are better able to do so.
A tax professional near you or Austin, TX accountant can ensure these contributions are properly allocated and that you are not missing out on this opportunity.
5. Rebalance Timing with Estimated Tax Payments
All of the above strategies can save you money on taxes but only if you coordinate them with your estimated payments.
Why It Matters
- Prevents overpaying the IRS, freeing up cash for your business.
- Avoids underpayment penalties that can erode savings.
- Creates alignment between your retirement contributions and your tax obligations.
A Practical Example
Suppose you expected to owe $60,000 in federal taxes, but your contributions reduce your taxable income enough that your liability is only $35,000. If you continue making estimated payments based on the original figure, you tie up $25,000 unnecessarily. By adjusting estimates, you keep your money working for you.
The Emotional Why
This is about balance. Retirement planning should not feel like choosing between today and tomorrow. It should create a rhythm where both are cared for. Rebalancing estimated tax payments ensures your future and your present stay in harmony.
With guidance from an Austin accounting firm or a taxation accountant, you can prevent missteps and keep everything aligned.
Why These Moves Are About More Than Money
Yes, these five moves reduce taxes and increase retirement savings. But the deeper why is about resilience. Each move is a conscious choice to prioritize your long-term well-being.
Retirement contributions are not just deductions. They are acts of stewardship. They communicate to your family, your employees, and yourself that you value stability and security. They represent courage. The courage to not just chase profit, but to prepare for what comes after.
Stories from the Field
- Maria, the consultant. By setting up a Solo 401(k) and pacing contributions monthly with guidance from her Austin, TX accountant, she reduced her taxable income by $40,000 in one strong year, while keeping flexibility in leaner ones.
- James, the established owner. In his 50s, he used a Defined Benefit Plan to contribute $150,000 annually, cutting his taxes significantly while preparing for retirement.
- Taylor, the hybrid planner. By combining a Defined Benefit Plan and a Solo 401(k), Taylor balanced immediate tax relief with long-term Roth growth, with support from an Austin accounting service.
Each of these stories shows that the right plan is not one-size-fits-all. It is tailored, personal, and grounded in your goals.
Why You Should Not Navigate Alone
Retirement planning overlaps tax preparation, accounting, and strategy. Many generic tax preparation services or tax places near you do not specialize in entrepreneurial needs. An Austin, Texas CPA, chartered public accountant, or certified CPA near you brings more than compliance. They bring clarity and confidence.
They help ensure:
- Contributions are maximized without hurting cash flow.
- State and federal rules are applied correctly.
- Plans adapt as your business and income evolve.
- You have a rhythm, not chaos, around both retirement and accountant tax
The Collective Goal
Ultimately, retirement planning is not about one person. It is about creating stability for families, for employees, and for communities. Entrepreneurs power the economy, but they deserve security for themselves as well.
The collective goal is this: to ensure your hard work today translates into resilience tomorrow. That is why these moves matter. They are not just strategies. They are commitments to a stronger future.
Your Next Step
If you want retirement contributions to work for you not against you and you want to cut your tax bill in the process, the time to act is now.
Connect with Insogna today. Our team of Austin accountants, certified CPAs, and tax consultants near you will:
- Review your income and retirement goals.
- Compare your Solo 401(k) and Defined Benefit Plan options.
- Design a monthly contribution rhythm that keeps your cash flow intact.
- Ensure you save on taxes now while building the security you deserve.
Your retirement plan should feel like an act of care, not a source of stress. With the right partner, it will be.