Suppose the only other employee in your sole proprietorship is your spouse who does the bookkeeping and billing. After a few lean years, business is booming and you want to sock away as much for retirement as you possibly can.
Strategy: Set up a solo 401(k) plan. Due to special tax rules, you can contribute more to this type of plan than other comparable retirement plans.
In fact, a solo 401(k) offers an unprecedented tax-saving opportunity for a married couple working together.
Here’s the whole story: For starters, you can elect to defer up to $17,500 in salary to a 401(k) plan (in both 2013 and 2014). Plus, if you’re age 50 or older, you can kick in an extra $5,500 for a maximum deferral of $23,000. The deferrals may be complemented by matching employer contributions subject to other limits.
Under the usual rules for defined contribution plans—such as SEPs and profit-sharing plans—the deductible contribution for 2013...(register to read more)