How to Optimize Your Retirement Plan if You Are Retiring Soon

How to Optimize Your Retirement Plan if You Are Retiring Soon

We understand how retirement can sneak up on you. One minute it feels like you are starting your business and have plenty of time to save, the next you are considering how to sell your business and retire comfortably. 

This is why we have put together the Truly Profit Plan, to help business owners at every stage plan for a comfortable retirement.

One of the best ways to do this is by taking advantage of the retirement plans available to you. 

Retirement Plans

Below we review some of the popular retirement plans, however, our emphasis will be on those ideal for business owners retiring soon. 

Roth IRA

A small annual contribution limit, but it is ideal if you are just getting started and not retiring soon. It both grows and is withdrawn tax free, making it a smart plan if you do not plan on retiring for a while.

2020 Annual Contribution Amount Allowed: $6,000

Traditional IRA

This plan is also ideal for those just getting started, not for those retiring soon. There is a small annual contribution limit and you will be taxed on growth when distributions are taken. 

2020 Annual Contribution Amount Allowed: $6,000

SOLO 401(k) and 403(b)

This can be an ideal retirement plan for business owners and their spouses. The contribution limits are generous but do vary from year to year. Business owners will find there are also low fees when it comes to this retirement plan. 

If your company does have a 401(k) then you will have to comply with the contribution limit your company sets.

2020 Annual Contribution Amount Allowed: $57,000


This plan is similar to the SOLO 401(k) and 403(b) in that it has a generous contribution limit. It is also ideal for one man/woman businesses, you can contribute different amounts each year, and it will not interfere with any employer 401(k), unlike the SOLO plan listed above. 

It is important to note here that this can be expensive. If you have employees you are required to make the same % contribution towards each employee. 

2020 Annual Contribution Amount Allowed: $56,000

Simple IRA

This can be an ideal option for small businesses and self-employed individuals. Businesses are required to make a contribution towards each employee at a flat rate of 2% or they can match employee contributions up to 3%. This is not going to be a good option for new businesses or if you have already maxed out your 401(k).

2020 Annual Contribution Amount Allowed: $13,500

Which Plan is Right For You?

While each plan has pros and cons, there are important factors to consider which will help you make the final decision. Some questions to think about include: 

  • Do you have a 401(k) you are already contributing to?
  • In how many years are you hoping to retire?
  • Do you have employees? If so, how many?
  • Do you have a spouse that is also able to contribute?

If you are curious about which plan is right for you or what other plans are out there, consider reaching out. We would be happy to work with you on how to optimize your retirement plan if you are retiring soon. 

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