Free 2018 Tax Planning2019-01-05T15:05:52+00:00

Free 2018 Tax Planning

Retirement contributions

If your business completely depends on you, the likelihood of selling your business at a decent price is very low. As a result, I highly recommend having a retirement plan.

This strategy is going to discuss the roth versus the traditional ira contribution. Later we will discuss running your retirement plan through your business.

Roth or Traditional?

The roth versus the traditional ira choice is based on when you think you will have the higher tax rate. Obviously, you cannot tell exactly what the future holds, so it is important to visit this topic regularly.

If you are projecting a higher tax rate today, then using the traditional ira will be better for you.

Let’s take a look at a sample analysis:

By contributing to a traditional IRA, this taxpayer is able to reduce tax liability by $2,420. If they chose a roth ira, they will get no deduction. Rather they will be able to withdraw their benefits tax free as shown below:





The roth ira investor gets to enjoy the benefits tax free! This is great if he/she is at a higher tax bracket at retirement.