Save On Taxes for 2020? Yes, You Still Can!
Submitted by Frye Financial Center on December 30th, 2020
Maximize Retirement Account Contributions - There's Still Time!
A qualified retirement plan remains one of the best tax advantaged savings opportunities available to small business owners and their employees. Now is the time to review what you actually contributed to your plan this year. If you haven't maxed out, there is still time to do so. Not only will you boost your retirement savings, but you'll reduce your taxes as well.
Maximum allowed contributions:
- Defined benefit/Cash balance plans enable owners to contribute potentially $300,000, depending on age and service.
- Profit sharing plans, or PSPs, allow each owner to allocate $57,000 (for 2020) and $58,000 (for 2021).
- 401(k) and Safe Harbor 401(k) plans can allow owners to fund the $19,500, or $26,000 if age 50 or over for 2020 and 2021, plus an additional employer contribution that can bring the total deduction up to $57,000/$63,500 if 50 or over (for 2020) or $58,000/$64,500 if 50 or over (for 2021).