I am SO excited about the upcoming 1:1 coaching series and podcast!! It’s going to be sooo good😊 super stoked about my August budget and finally getting back on track! Curious to see how your numbers turn out at the end of the month. As always, super grateful to be a part of each other’s journey to financial freedom!!🎉🤩
Hey Leila - If your SEP-IRA was established using IRS Form 5305 (which is what Fidelity uses) then you cannot also contribute to a Solo 401k in the same tax year for the same business. In order to contribute to both plans in the same year, your plan provider must set up your SEP IRA using a prototype SEP document. I had to amend my Vanguard SEP-IRA to a prototype plan with Schwab in order to open and contribute to a Solo 401k this year since I had already contributed to my SEP-IRA for 2024.
Thank you for letting me know. These things are SO confusing 🤦🏻♀️ I have a dumb question...if I set up my 401k through Guideline and through my business payroll as a "safe harbor 401k" is it still considered a solo 401k?
Also, after reading into this more...it looks like this just affects how much I can contribute in the year? As in, the max is now aggregated so I'm just better off focusing on 1 or the other
@@PersonalFinancewithLeila From my understanding, a 401k (regardless of safe harbor) is considered a "qualified plan" and IRS Form 5305 prohibits employers from maintaining any other qualified plan alongside the SEP-IRA. The problem isn't the fact that you already have a SEP-IRA, the problem is the TYPE of SEP-IRA you opened, which is an IRS model 5305 SEP. I know, it is so confusing and took me like a month of back and forth with 4 different professionals who were all telling me DIFFERENT things. I think Solo 401ks are still just so new and somewhat uncommon so the tax rules around them are not as well known. My problem was that after I had already contributed to my SEP-IRA this year, I realized I was going to be able to contribute a LOT more than that limit so I was looking into my options to save more on taxes. And that's when I discovered that my SEP-IRA was an IRS model 5305 SEP and I would not be able to contribute to a Solo 401k in the same year. I scoured the internet knowing that SOMEONE had to have been in this situation before and there has to be a workaround. That's when I discovered some forum post of some guy who said he was able to amend his 5305 SEP-IRA to a prototype SEP with Schwab. The amendment backdates your SEP agreement to the first of the year so that you only contributed to the prototype plan that year in the IRS' eyes, which then allows you to contribute to multiple qualified plans in one year. And yes at that point the contribution limit on both is aggregate. I'm no tax expert but I confirmed all of this with my tax advisor.
What do you think about investing in a home gym ? It might be expensive up front , but after you get it set up , no more gym membership , plus savings in gas and time traveling
It's up to you! I prefer budgeting for the month so Day 1 to the end and whatever comes in for the month goes in the budget, whatever is spent in the month is counted as spend for that month.
No purpose! I originally decided to open the SEP IRA but then later decided I wanted to start the 401k because I could have a free plan with Guideline for 1 year
Just a reminder, if you replace all four tires or just the front tires, make sure you get a alignment.
Definitely! I'll probably replace all 4!
Just signed up for Mint Mobile. So excited. Thank you for sharing the savings opportunity!
Yay!! Thank you for using my link!! I hope you love it!
I am SO excited about the upcoming 1:1 coaching series and podcast!! It’s going to be sooo good😊 super stoked about my August budget and finally getting back on track! Curious to see how your numbers turn out at the end of the month. As always, super grateful to be a part of each other’s journey to financial freedom!!🎉🤩
Hey Leila - If your SEP-IRA was established using IRS Form 5305 (which is what Fidelity uses) then you cannot also contribute to a Solo 401k in the same tax year for the same business. In order to contribute to both plans in the same year, your plan provider must set up your SEP IRA using a prototype SEP document. I had to amend my Vanguard SEP-IRA to a prototype plan with Schwab in order to open and contribute to a Solo 401k this year since I had already contributed to my SEP-IRA for 2024.
Thank you for letting me know. These things are SO confusing 🤦🏻♀️
I have a dumb question...if I set up my 401k through Guideline and through my business payroll as a "safe harbor 401k" is it still considered a solo 401k?
Also, after reading into this more...it looks like this just affects how much I can contribute in the year? As in, the max is now aggregated so I'm just better off focusing on 1 or the other
@@PersonalFinancewithLeila From my understanding, a 401k (regardless of safe harbor) is considered a "qualified plan" and IRS Form 5305 prohibits employers from maintaining any other qualified plan alongside the SEP-IRA. The problem isn't the fact that you already have a SEP-IRA, the problem is the TYPE of SEP-IRA you opened, which is an IRS model 5305 SEP. I know, it is so confusing and took me like a month of back and forth with 4 different professionals who were all telling me DIFFERENT things. I think Solo 401ks are still just so new and somewhat uncommon so the tax rules around them are not as well known. My problem was that after I had already contributed to my SEP-IRA this year, I realized I was going to be able to contribute a LOT more than that limit so I was looking into my options to save more on taxes. And that's when I discovered that my SEP-IRA was an IRS model 5305 SEP and I would not be able to contribute to a Solo 401k in the same year. I scoured the internet knowing that SOMEONE had to have been in this situation before and there has to be a workaround. That's when I discovered some forum post of some guy who said he was able to amend his 5305 SEP-IRA to a prototype SEP with Schwab. The amendment backdates your SEP agreement to the first of the year so that you only contributed to the prototype plan that year in the IRS' eyes, which then allows you to contribute to multiple qualified plans in one year. And yes at that point the contribution limit on both is aggregate. I'm no tax expert but I confirmed all of this with my tax advisor.
@@cointrolfreak Thank you for all this!!
Jackson Hole is on my bucket list. Woohoo podcast 🎉 Great August breakdown.😊❤😊
Thank you Cat!!
What do you think about investing in a home gym ? It might be expensive up front , but after you get it set up , no more gym membership , plus savings in gas and time traveling
I think it's a good investment if it's used! Personally, I really enjoy the gym environment!
Jackson Hole is BEAUTIFUL. Expensive but worth it.
We're excited!!
I just love the finance videos ❤
Thank you!!
Hi, I receive my benefit money on the 10th of every month, is this where I start the budget from or from the 1st of the month. Many Thanks x
It's up to you! I prefer budgeting for the month so Day 1 to the end and whatever comes in for the month goes in the budget, whatever is spent in the month is counted as spend for that month.
@@PersonalFinancewithLeila Thanks for the advice. x
Hi Leila,
What’s the purpose of having both the Sep Ira and solo 401k as opposed to just using the solo 401k?
Cut back on donate and health and beauty
No purpose! I originally decided to open the SEP IRA but then later decided I wanted to start the 401k because I could have a free plan with Guideline for 1 year
Hi Leila, who designs your stickers? I just want to make some for personal use
I used someone on Fiverr! Her username is @ danalicetee
@@PersonalFinancewithLeila ty