Ep76: Maximizing Retirement Savings for Solopreneurs and Side Hustlers with the Solo 401k

Finding Financial Freedom with The Frugal Physician - Finance, Wellness, Budget, Student Loans, Wealth, Doctor, Fitness, Money

Hosted by: Dr. Disha Spath

Guest: Sean Mullaney, Advice-Only Financial Planner and Author of The Solo 401k: The Solopreneur’s Retirement Account

This episode is sponsored by

PearsonRavitz– Helping physicians safeguard their most valuable assets.

This episode is also sponsored by

FacetWealth– Discover how Facet is transforming financial planning for physicians with personalized, flat-fee financial planning—visit facet.com/frugalphysician to start building your financial future today.

Episode Highlights:

• Introduction: Dr. Disha Spath welcomes listeners back and introduces Sean Mullaney, President of Mullaney Financial and Tax Inc, a fee-only financial planner and tax advisor for self-employed individuals and small business owners.

• About Sean Mullaney: Sean shares his background, transitioning from a career in corporate tax planning to launching an advice-only financial planning firm. He discusses his award-winning blog, FITaxGuy.com, and his book The Solo 401k: The Solopreneur’s Retirement Account, which has become a valuable resource on tax planning for freelancers and independent contractors.

• Sean’s Financial Journey: Sean discusses his passion for personal financial planning and his motivation to help small business owners and entrepreneurs maximize their savings through tax-efficient retirement strategies.

• Understanding the Solo 401k: Sean explains the structure and benefits of the solo 401k for self-employed retirement planning, highlighting its differences from traditional 401ks and IRAs. This retirement option is designed for self-employed professionals, including “physicians with side gigs” and “freelancers,” offering flexibility in contributions and investment options.

• Combining W-2 Employment with Side Hustles: Sean offers strategies for combining a solo 401k with retirement planning for 1099 income when you have both W-2 earnings and independent contracting income, helping listeners maximize their retirement contributions.

• Alternatives to the Solo 401k: Sean reviews other self-employed retirement plans, including SEP IRAs, Simple IRAs, and Defined Benefit Plans, explaining the pros and cons of each option based on business income, structure, and goals.

• The Backdoor Roth IRA Strategy: Sean explains the solo 401k’s compatibility with the backdoor Roth IRA strategy for high-income earners, allowing listeners to bypass the pro-rata rule and make tax-free contributions without triggering extra tax burdens.

• Rollover Strategies for Former Employer 401ks: Sean provides retirement rollover options for managing a previous employer’s 401k. He explores the options of leaving it where it is, rolling it over to a traditional IRA, or moving it to a solo 401k, with insights on tax benefits, fees, and creditor protection.

• Future of Retirement Savings for Entrepreneurs: Sean shares his perspective on the trend toward Roth accounts, the tax outlook for retirees, and the impact of political dynamics on future retirement tax planning.

• Where to Find Sean Mullaney: Sean invites listeners to explore his blog, FITaxGuy.com, for insights on tax planning for financial independence and to check out his YouTube channel, featuring weekly personal finance videos for practical financial advice.

Key Takeaways:

• Solo 401k Benefits for Self-Employed Individuals: Solo 401ks offer higher contribution limits, greater flexibility in investment choices, and significant tax advantages for self-employed professionals and side hustlers.

• Combining Retirement Accounts for Physicians and Entrepreneurs: Professionals with both W-2 income and 1099 earnings can leverage multiple retirement accounts to maximize tax-advantaged savings.

• Backdoor Roth IRA Advantages: A solo 401k allows high-income earners to implement a backdoor Roth IRA strategy while avoiding pro-rata rule issues, making it especially valuable for physicians with 1099 income.

• 401k Rollover Considerations for Solopreneurs: Carefully weigh rollover options for former employer 401ks, focusing on factors like fees, tax rules, and creditor protection.

Recommended Resources:

• The Solo 401k: The Solopreneur’s Retirement Account by Sean Mullaney

• Sean’s blog: FITaxGuy.com – Covering “tax planning for financial independence” topics.

• Sean’s YouTube channel: Sean Mullaney Videos

Thank you for tuning in to Finding Financial Freedom with The Frugal Physician! If you enjoyed this episode, please subscribe, rate, and share it with your colleagues. Stay frugal and financially free!

The discussion is intended to be for general educational purposes and is not tax, legal, or investment advice for any individual. Disha and the Finding Financial Freedom with The Frugal Physician podcast do not endorse Sean Mullaney, Mullaney Financial & Tax, Inc. and their services. Guest appearances on the podcast do not constitute their endorsement of any sponsors of the Finding Financial Freedom with The Frugal Physician podcast.