Retirement

Solo 401(k) or SEP IRA, What Is the Best Retirement Plan for a Solo Founder?

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Solo 401(k) or SEP IRA, What Is the Best Retirement Plan for a Solo Founder?

Solo 401(k) or SEP IRA, What Is the Best Retirement Plan for a Solo Founder?

Solo 401(k) vs SEP IRA for a solo founder? For 2026, Solo 401(k) adds employee deferral ($24,500) on top of employer contribution up to $72,000 total — often the largest deduction. SEP IRA is simpler if you missed deferrals. Model limits, Roth, spouse, and timing here.

Summary of What This Blog Covers

  • Fast breakdown of contribution limits, Roth options, spouse participation, and payroll timing for a one-person business
  • Clear “aha” moments so the rules click without a spreadsheet headache
  • Practical scenarios, decision checklist, and five FAQs so you can act with confidence

Contribution Limits & Roth Options (2026)

Solo 401(k): employee deferral up to $24,500 + employer contribution up to 25% of comp → total $72,000 (or $80,000 if 50+ catch-up). Roth deferral available.
SEP IRA: employer-only, up to 25% of comp or $72,000 (no employee deferral, no Roth).

Spouse Participation & Payroll Timing

Solo 401(k): spouse can participate if bona fide employee (W-2 wages). Increases total contribution room.
SEP IRA: spouse treated as self-employed (no W-2 required).
Timing: Solo 401(k) deferral by Dec 31; employer by tax deadline. SEP by tax deadline (including extensions).

Solo 401(k) — When It Wins

Higher total limit ($72k vs SEP $72k but no deferral), Roth option, spouse participation, loan feature, earlier deadline for deferral. Best if you can afford employee deferral and want flexibility.

SEP IRA — When It Wins

Simpler setup, no annual commitment, deadline to tax filing (extensions), no payroll needed for spouse. Ideal if you missed deferral or want minimal paperwork.

Decision Checklist for Solo Founders (copy-paste)

☐ Projected profit & tax savings modeled
☐ Can I afford employee deferral by Dec 31?
☐ Want Roth option?
☐ Spouse participating?
☐ Need loan feature?
☐ Prefer simpler setup & later deadline?
☐ Multi-state or complex payroll?

Funding Calendar & Setup Checklist (copy-paste)

☐ Plan selected & documented
☐ Plan opened & funded (deferral by Dec 31 for Solo 401(k))
☐ Employer contribution scheduled (tax deadline)
☐ Spouse W-2 / participation set (if applicable)
☐ Roth election made (if desired)
☐ Payroll configured (Solo 401(k))
☐ Contribution receipt saved

Book a Fractional CFO Strategy Session

Insogna models limits, Roth choices, spouse participation, and payroll timing, then builds a funding calendar around your cash flow. We pick the right plan and lock in the savings. Whether you searched “tax preparer near me,” “Austin Texas CPA,” or “tax accountant near me,” contact us to decide with confidence and act this year.

Frequently Asked Questions

1) Can I do both Solo 401(k) and SEP IRA?

No — they are alternatives. Choose one per year. Solo 401(k) usually allows higher total contribution.

2) Spouse participation — do they need payroll?

Solo 401(k): yes, W-2 wages required. SEP IRA: no, treated as self-employed.

3) Roth option — which plan?

Solo 401(k) allows Roth deferral. SEP IRA does not (traditional only).

4) Deadline for employer contribution?

Both: tax filing deadline (including extensions). Solo 401(k) employee deferral: Dec 31.

5) Loan feature — only in Solo 401(k)?

Yes — Solo 401(k) allows loans up to $50k or 50% of balance. SEP IRA does not.

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How Do Section 1256 Contracts Work for Tax Planning and When Do the 60/40 Rules Actually Help You?

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How Do Section 1256 Contracts Work for Tax Planning and When Do the 60/40 Rules Actually Help You?

How Do Section 1256 Contracts Work for Tax Planning and When Do the 60/40 Rules Actually Help You?

What if I told you some traders get long-term capital gains treatment without holding anything long term? Not a loophole — it’s Section 1256.

Summary of What This Blog Covers

  • What counts as Section 1256 contract, how year-end mark-to-market works
  • Origin of the 60/40 long-term/short-term tax split
  • Scenarios where 60/40 lowers your tax bill
  • Stepwise checklist and timing calendar for futures tax planning

What Counts as a Section 1256 Contract

Regulated futures contracts, non-equity options, dealer equity options, foreign currency contracts traded on regulated exchanges, broad-based index options.

Year-End Mark-to-Market Rule

All open positions are treated as sold at year-end FMV. Gains/losses recognized annually — no deferral.

Where the 60/40 Tax Split Comes From

60% long-term capital gains (max 20%) + 40% short-term (ordinary rates) — blended effective rate often lower than 37% ordinary.

Scenarios Where 60/40 Actually Helps

High ordinary bracket → 60/40 blend saves vs short-term rates. Net loss → carry back 3 years to offset prior 1256 gains.

Futures Tax Planning Checklist (copy-paste)

☐ Confirm contracts qualify as §1256
☐ Track open positions at year-end
☐ Mark-to-market gains/losses calculated
☐ 60/40 split applied on Form 6781
☐ Net loss carryback considered (Form 1045)
☐ Documentation & records saved

Book Your Futures Tax Planning Session

Insogna confirms which contracts qualify, models federal/state impact, prepares Form 6781, and builds a filing-ready plan using Schedule AI when needed. Whether you searched “tax preparer near me,” “Austin, Texas CPA,” or “tax preparation services near me” for trader-savvy help, we make futures tax planning clear and effective.

Frequently Asked Questions

1) Which contracts qualify as §1256?

Regulated futures, non-equity options, foreign currency contracts on exchanges, broad-based index options.

2) Why mark-to-market at year-end?

IRS requires unrealized gains/losses to be recognized annually — no deferral of tax.

3) How does 60/40 work?

60% long-term capital gains rate (max 20%) + 40% short-term (ordinary rates) — blended effective rate often lower.

4) Net loss — carryback possible?

Yes — carry back 3 years to offset prior 1256 gains (Form 1045).

5) States follow 60/40?

Most do not — state tax treatment varies. We model federal vs. state impact.

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SEP IRA or Solo 401(k), Which Retirement Plan Cuts My Tax Bill the Most This Year?

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SEP IRA or Solo 401(k), Which Retirement Plan Cuts My Tax Bill the Most This Year?

SEP IRA or Solo 401(k), Which Retirement Plan Cuts My Tax Bill the Most This Year?

Your biggest tax deduction isn’t a loophole — it’s choosing the right plan. Solo 401(k) often cuts more this year; SEP gives deadline flexibility.

Summary of What This Blog Covers

  • Side-by-side SEP IRA vs Solo 401(k) for 2025
  • Limits, deadlines, Roth options, S Corp/sole-prop nuances
  • Step-by-step funding calendar + cash-flow impact

The 2025 Quick Verdict

Solo 401(k) = $23,500 employee deferral + employer dollars → usually bigger deduction this year.
SEP IRA = employer-only → fundable by filing deadline.

Contribution Limits (2025)

Solo 401(k): $23,500 deferral + up to 25% employer → $70,000 max.
SEP IRA: Up to 25% employer → $70,000 max.

Deadlines & Setup

Solo 401(k): Establish by 12/31, deferrals by payroll, employer by filing.
SEP IRA: Establish & fund by filing deadline (extensions OK).

Quick Math Examples

$150k profit, $60k salary → Solo 401(k) ~$52k total vs SEP ~$37.5k. Solo wins ~$14.5k deduction.

When Solo 401(k) Wins

Higher profit, can run payroll, want Roth, backdoor Roth friendly.

When SEP IRA Wins

Late in year, missed payroll setup, simpler admin, no employees.

Roth Options

Solo 401(k) = Roth deferrals available. SEP = traditional only.

Your Funding Checklist (copy-paste)

☐ Choose plan (Solo 401(k)/SEP)
☐ Establish Solo 401(k) by 12/31 if needed
☐ Run payroll deferrals
☐ Schedule employer contribution
☐ Document salary if S Corp
☐ Fund by deadline

Book Your Plan Strategy

Insogna models SEP vs Solo 401(k) for your exact profit, sets deadlines, provides paperwork, and coordinates payroll. Whether you searched “tax preparer near me for retirement plans,” “Austin Texas CPA for Solo 401k,” or “SEP IRA planning,” we make the biggest deduction happen this year.

Frequently Asked Questions

1) Can I have both plans?

No — limits are combined. Choose one.

2) Solo 401(k) with no employees?

Perfect for owner-only businesses.

3) Roth Solo 401(k) worth it?

Lower bracket now → Roth. Higher → traditional.

4) S Corp salary impact?

Salary fuels deferral. Higher reasonable salary = bigger total in Solo 401(k).

5) Backdoor Roth conflict?

SEP counts in pro-rata rule. Solo 401(k) does not.

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How Do Retirement Plans Actually Cut Your Business Taxes Today?

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What Are 5 Rules for Writing Off Your Car in 2025 as a Business Owner?

What Are 5 Rules for Writing Off Your Car in 2025 as a Business Owner?

Your steering wheel can’t testify — but your log can. These 5 rules turn ordinary miles into real 2025 deductions without audit drama.

Summary of What This Blog Covers

  • Five car write-off rules that matter in 2025
  • Standard mileage vs actual expenses choice
  • Logs, Section 179, luxury caps, and second-vehicle strategy

1. Pick Your Method in Year One

First year in service: choose standard mileage or actual expenses. Switch later? Limited options.

2. Commuting Is Always Personal

Home to regular office = nondeductible. Temporary sites, errands, client visits = business miles.

3. Log Contemporaneously

Date, destination, purpose, miles. App or notebook — done the same week, not in March.

4. Mind Luxury Auto Caps & Section 179

Actual method: depreciation capped (2025 limits pending). Section 179/bonus available but with limits on heavy SUVs.

5. Consider a Second Vehicle

100% business use = no allocation hassle. Often beats fighting mixed-use percentages.

Car Write-Off Checklist (copy-paste)

☐ Method chosen (standard mileage or actual)
☐ Contemporaneous log active
☐ Commuting excluded
☐ Business % calculated
☐ Luxury caps / Section 179 modeled
☐ Second vehicle considered

Book Your Vehicle Deduction Review

Insogna models standard mileage vs actual for your exact miles + costs, reviews logs, checks luxury caps/Section 179, and hands you a one-page plan. Whether you searched “tax preparer near me for business vehicle deduction,” “CPA Austin car write-off,” or “tax accountant near me for mileage,” we turn miles into real savings.

Frequently Asked Questions

1) Standard mileage or actual — which wins?

Run both. Low-mileage/high-cost cars → actual. High-mileage → standard.

2) Home office changes commuting?

Yes — trips from qualified home office can be business miles.

3) What log format works best?

App with export or simple spreadsheet: date, start/end odometer, destination, purpose, miles.

4) Section 179 on any car?

Limited. Heavy SUVs (>6,000 lbs) get bigger caps.

5) Electric vehicle credits?

Separate from deduction — clean-vehicle credit if qualified.

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Which of the 2 Retirement Plans Lower Taxes the Most This Year? Solo 401(k) or SEP IRA?

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Which of the 2 Retirement Plans Lower Taxes the Most This Year? Solo 401(k) or SEP IRA?

Which of the 2 Retirement Plans Lower Taxes the Most This Year? Solo 401(k) or SEP IRA?

The largest tax cut you control this year isn’t a deduction — it’s choosing the right retirement plan. Solo 401(k) usually wins for bigger deductions; SEP shines for deadline flexibility.

Summary of What This Blog Covers

  • Side-by-side Solo 401(k) vs SEP IRA for 30-year-old entrepreneurs
  • Limits, deadlines, owner-employee nuances, cash-flow impact
  • Step-by-step plan to capture the biggest deduction this year

The 60-Second Verdict

Solo 401(k) = employee deferral + employer contribution → usually bigger deduction this year.
SEP IRA = employer-only → simpler, fundable by extension.

2025 Contribution Limits

Solo 401(k): $23,500 employee deferral + up to 25% employer → $70,000 max (under 50).
SEP IRA: Up to 25% employer → $70,000 max.

Deadlines & Setup Timing

Solo 401(k): Establish by 12/31, employee deferral by final payroll, employer by filing.
SEP IRA: Establish & fund by filing deadline (including extensions).

Quick Math Comparison

$150k profit, $60k salary → Solo 401(k) ~$52k total contribution vs SEP ~$37.5k. Solo wins by ~$14.5k deduction.

When Solo 401(k) Wins

Higher profit, can defer pay, want Roth option, planning backdoor Roth (no pro-rata).

When SEP IRA Wins

Late in year, missed payroll setup, simpler administration, no employees yet.

Roth Considerations

Solo 401(k) offers Roth deferrals. SEP does not. Roth = pay tax now, grow tax-free.

Your Year-End Checklist (copy-paste)

☐ Run profit projection
☐ Choose plan (Solo 401(k)/SEP)
☐ Establish Solo 401(k) by 12/31 if needed
☐ Set payroll deferral %
☐ Schedule employer contribution
☐ Document reasonable salary if S Corp

Book Your Contribution Strategy

Insogna models Solo 401(k) vs SEP against your exact numbers, sets deadlines, provides paperwork, and coordinates payroll. Whether you searched “tax preparer near me for retirement plans,” “Austin Texas CPA for Solo 401k,” or “SEP IRA help,” we turn the biggest deduction into reality this year.

Frequently Asked Questions

1) Can I have both plans?

No — limits are combined. Pick one.

2) Do I need employees to use Solo 401(k)?

No — perfect for owner-only businesses.

3) Roth Solo 401(k) or traditional?

Lower bracket now → Roth. Higher bracket → traditional deferral.

4) How does S Corp salary affect this?

Salary fuels employee deferral. Higher reasonable salary = bigger Solo 401(k) total.

5) Backdoor Roth conflict?

SEP counts in pro-rata rule. Solo 401(k) does not — many keep IRAs at zero.

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What Is the 6-Year Tax Lifecycle Women Business Owners Should Expect After a Production Wraps?

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What Is the 6-Year Tax Lifecycle Women Business Owners Should Expect After a Production Wraps?

What Is the 6-Year Tax Lifecycle Women Business Owners Should Expect After a Production Wraps?

Most productions follow a six-year arc: (1) close the books, (2) first distribution cycle, (3) residuals stabilize, (4) loss carryforwards unlock, (5) back-end waterfall payouts, (6) final returns and wind-down. Your K-1 evolves across these years, guiding estimated taxes, basis tracking, investor communications, and when to dissolve the partnership.

You carried the creative load and the leadership load. After the last day on set, you still hold the responsibility for payroll wrap, investor confidence, and the tax path that follows. This guide is designed to help you make confident financial decisions without jargon — plain language, lockstep support, and a steady calendar.

Summary of What This Blog Covers

  • A practical, year-by-year plan from wrap through distribution, residuals, and wind-down.
  • What to expect on your Schedule K-1 in each phase and how loss carryforwards can reduce taxes.
  • Clear steps for investor updates, state filings, estimates, and timing the partnership’s clean exit.

Year 1 – Wrap to First Tax Season, Build a clean baseline

What you’ll see: Final cost reports, late invoices, first Form 1065 & K-1, 1099-NEC setup.

Why it matters: Year 1 is the foundation — clean coding now prevents delays later.

< >How we support you: Reconcile post-wrap invoices, build investor update format, create state filing matrix.

Year 2 – Release and Distribution, The first “income K-1”

What you’ll see: Distributor statements, ordinary income on K-1, higher estimates while cash is reserved.

How we support you: Dual cash + taxable forecasts, safe-harbor estimates, one-page investor brief.

Year 3 – Residuals Stabilize, Turn the searches into a plan

What you’ll see: Predictable library revenue, passive income, first use of suspended losses.

How we support you: Track passive loss usage, right-size reserves, connect income to your personal goals.

Year 4 – True-Ups and Loss Carryforwards, Put prior losses to work

What you’ll see: Distributor audit adjustments, more complex K-1, possible FBAR review.

How we support you: Use-or-carry analysis, waterfall refresh, foreign-account guidance.

Year 5 – Back-End Waterfalls, Recoupment ends and performance payouts begin

What you’ll see: Promote tiers trigger, spike in K-1 income and estimates.

How we support you: One-page waterfall walkthrough, pre-fund large estimates, plan state exits.

Year 6 – Wind-Down, Final K-1s and a clean exit

When to wind down: Receipts < annual compliance cost and all obligations complete.

How we support you: Close accounts, file final returns, deliver final investor letter and archive.

K-1s Across the Years: What Changes and What to Watch

Years 1–2: Large deductions → first income
Years 3–4: Residuals + loss usage
Year 5: Waterfall shifts
Year 6: Final close-out

Simple Planning Frameworks You Can Use Now

If/Then guide, mini-calculators, decision priorities — all designed to keep cash protected, losses used, and investors informed.

Case Examples (anonymized)

Producer A (documentary), Producer B (scripted short), Producer C (unscripted pilot) — each finished with calm filings, no penalties, and strong investor goodwill.

Ready for a calm, coordinated plan from wrap to wind-down?

We will map your six filing seasons, create investor updates you can send with confidence, and align estimates with real cash. Many clients find us searching “CPA Austin”, “Austin tax prep for film partnerships”, or “tax accountant near me for K-1s” — we’re here when you are.

Frequently Asked Questions

1) Do I need a CPA or an enrolled agent for K-1 partnerships?

Both can work — choose someone with direct entertainment K-1, residual, and waterfall experience.

2) Are distributions taxable when I receive them?

Not automatically. Tax follows your K-1 allocation and basis. We forecast estimates so cash shocks are avoided.

3) How do I manage contractors and forms?

Collect W-9s and issue 1099-NEC. QuickBooks Self-Employed simplifies tracking.

4) What if I have a foreign collection account?

Discuss FBAR thresholds with your advisor — clear guidance prevents over- or under-filing.

5) When should I dissolve the partnership?

When receipts no longer justify compliance costs and all obligations are complete.

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