Looking to reduce your 2018 taxable income by making the maximum 401(k) contribution?
Great idea, but time and again, owners and other highly compensated employees will max out their 401(k) deferrals, only to get a “corrective distribution”—in other words, a refund that’s taxable—the next year.
That refund may not only cause you to owe more taxes next year, it could bump you up to a higher tax bracket. The corrective distribution can also mean that your employer match contribution was reduced, so your overall retirement savings took a bigger hit.
You can avoid that situation, but you have to act now.
Some contribution limits are higher this year
A safe harbor 401(k) provision enables owners and eligible employees to defer up to their 401(k) maximums:
- Up to $18,500 in pre-tax deductions; up to $24,500 if you are 50 or older
- Contributions totaling $55,000 ($61,000 for those 50 and older), including both employee deferrals and employer contributions
So, if you’re thinking about a safe harbor 401(k), you only have a few weeks left. We’ll work to design a plan that will work for everyone, including the business owner.
Monday, October 1 is the deadline for setting up a safe harbor 401(k) this year.
Click below to set up a free 401(k) consultation. And if you already have a 401(k), then our team can help you implement a safe harbor provision for next year.
Investment Products are not FDIC or any other Government Agency Insured, and may lose value. By replying to this email, you consent to Actify’s monitoring activities of all communication that occurs on Actify’s systems.
We are required by IRS Circular 230 to inform you that any statements contained herein are not intended or written to be used, and cannot be used, by you or any other taxpayer, for the purpose of avoiding any penalties that may be imposed by federal tax law.
The information contained in this message and any attachments is intended only for the use of the individual or entity to which it is addressed, and may contain information that is privileged, confidential and exempt from disclosure under applicable law. If you have received this message in error, you are prohibited from copying, distributing, or using the information. Please contact the sender immediately by return email and delete the original message.
Actify Investor Retirements, LLC dba Corporate Payroll Services. Investment advisory services provided by Actify Investor Retirements, LLC. Actify Investor Retirements, LLC is a Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein.