2015 Retirement Tax Planning For Small Business Owners

Holly Magisterfor Forbes writes:  In my recent post, I shared several strategies for successful entrepreneurs to employ in 2015 that can ultimately increase the amount of money they have access to during retirement.

Those strategies included a few ways to maximize income tax deductions during years of high income, layer qualified retirement accounts, access a ROTH IRA when income is high, and create taxable and tax free pools of assets for withdrawal during retirement.

According to the Chief Actuary of the Social Security Administration, “Currently, the Social Security Board of Trustees projects program cost to rise by 2035 so that taxes will be enough to pay for only 75 percent of scheduled benefits.” This bleak reality is not of great concern to the successful entrepreneur who may not need to rely heavily on social security benefits retirement. Yet,  any potential reduction in social security benefits in the future is a serious threat to the well-being of the 28 million small business owners in America.

This post offers a couple of ways for the small business owner to improve his or her retirement cash flow during the earning years by reducing taxes and during the retirement years by having access to tax-free assets to pay living and health-related expenses.

Small Business Owners May Deduct From Income to Save for Retirement
Regardless of one’s age, taking advantage of tax deferral by maximizing retirement savings is the basic foundation for the small business owner’s financial plan. The following summarizes the various retirement plans available to small business owners and their respective contribution limits during 2015:

With the exception of the ROTH IRA, all of the contributions noted above provide a federal tax deduction against ordinary income within certain income limitations.

Roth IRA Accounts Offer Small Business Owners Options
Using a Roth IRA in combination with another retirement plan (with the exception of the traditional IRA) is one of the best defenses against potential future increases in the federal income tax rates for retirees. Although in 2015, the Roth IRA is limited to taxpayers who have a Modified Adjusted Gross Income of $183,000 or less, going through the back door to make a Roth IRA contribution is still a viable strategy.SNIP, the article continues @ Forbes, click here to continue reading.....