143 ⎸Retirement Planning with Matt Ruttenberg

In this interview episode I’m chatting with 401k expert, Matt Ruttenberg, and he dives into ALL things retirement planning. Seriously, this is packed with helpful info! Tune in to get strategies for planning your retirement & hear how different biz structures impact those plans and contributions.

In this episode you’ll hear:

• Retirement planning strategies for high-income individuals
• 401(k) Plan options & all the roles involved in a Plan
• Deadlines and contributions for 401(k) Plans
• Flexibilities and limitations of 401(k) Plans
• Retirement Plans for employees
• Solo 401(k) vs Group Plan

Resources mentioned in this episode:

• Reach out to Matt for retirement planning help for you or your clients!

Meet Matt
I am a 401k (retirement plan) expert and education business owners, accountants, bookkeepers, etc. on the vast retirement plan space. I am the CMO/Co-Owner of Life, Inc. Retirement Services, an independent 401k administration company building custom retirement plans for small and mid-sized business. I am also the Founder of SureLI Insurance, and online insurance agency focused on serving the Financial Independent Community.

Connect with Matt
💼 LinkedIn: https://www.linkedin.com/in/mattruttenberg/
🌐 Website: 401k.expert
📧 Email: matt.ruttenberg@lifeincrs.com

Thanks for listening. If this episode inspired you in some way, take a screenshot of you listening on your device and post it to your Instagram stories and tag me, @ambitiousbookkeeper

For more information about the Ambitious Bookkeeper Podcast or interest in our programs or mentoring visit our resources below:

• Visit our website: ambitiousbookkeeper.com
• Follow the Blog: ambitiousbookkeeper.com/blog
• Connect on Instagram: instagram.com/ambitiousbookkeeper
• Connect on LinkedIn: Linkedin.com/in/SerenaShoup
• Connect on Facebook: Facebook.com/serenashoupcpa

Thank you for your support of our show. If you haven’t left a review yet it’s super simple. Please go to: https://www.ambitiousbookkeeper.com/podcast and leave your review.

Podcast Publishing Tools we use:

• Podcast Editing: Sabr Media LLC
• Descript (affiliate link)
• Buzzsprout (affiliate link)

Transcript

Copy Transcript Copied

0:00

what I'm hearing is like another vote for waiting to set up an S Corp until you've covered all of your bases and figured out kind of your strategy and your goals with your money. Yeah, which is kind of what I recommend anyway, because a lot of people get sucked into this, like, I almost want to call it a fad, but it's been around forever of just electing S Corp status to save money on taxes. But, the tax pros that are pushing this aren't looking at the whole entire picture, right? If they're not looking at the retirement plan and all of that in conjunction with the tax savings of the S Corp, like, it might not make sense. Welcome back to the Ambitious Bookkeeper podcast. Today we have another guest on, his name is Matt. I almost messed that up because we just talked about that and I was going to call you Mike, but it's Matt Ruttenberg. He's here to chat with us about retirement planning, which is something that I feel like all of us bookkeepers can be better burst in. So I'm super glad you're here and I'll let you introduce yourself with your background. Thanks, Serene. Appreciate you having me on the, on the podcast. Yeah, I, I I've been in the business for 20 years. We, I'm a co owner of Lightbeam Retirement Services, which is a, Basically a custom 401k slash retirement plan administration company. And which, which means we're the ones who designed the plan. We create the documents, we do all the compliance and act as fiduciary and all that thing. So we build them from a custom level. Again, doing it for 20 years, I also own a online life insurance company. Agency for term life insurance called Shirley. and that's another, secondary business that kind of flows together and doing this for a long time and doing it for a long time. Awesome. Well, I personally am excited to talk to you and, and, selfishly ask some questions about retirement planning. And before we hit record I was saying. It would be really cool to, to talk about, advanced strategies for saving tax monies, which is always something that is a hot topic, right? Everyone would love to save money in taxes and it's like a double benefit when you can save money in taxes and put money away for the future. So I guess we could just start there and yeah, give us, give us your best. Tip on that. Yeah. Yeah. It's on a high level point, you know, a lot of times, you know, we always ask two questions when the client comes in, what's your, what's your priority? Is it you or your employees basically? and then how much do you want to say? And the first question is kind of aligns the design of it. Do we need to focus on the retention and recruitment of employees? Or do we go another path where that's kind of a, yes, it's nice and ancillary piece. And the number one goal is to save taxes and stockpile for your own retirement, right? Or both. A lot of times it's both. I want to take care of both. And so in this instance, you know, in this scenario, we're kind of talking about more of a the stockpile for yourself and save money on taxes. So we go through certain plan design strategies so this is for high income folks, right? This is kind of a high income, high income strategy scenario. And I want, look at it as an upside down, pre tiered wedding cake, okay? So you have this visual of the upside down, the smallest level is now on the bottom. Middle is in the middle and the largest is on the top. So the bottom layer and every layer above has to be designed a very certain way, special way in order to maximize the layer above it. And when you do it that way, it's the most efficient and most streamlined model in order for you as the owner to give the yourself the as many of the contributions as you can versus having to. Give too much to the employees. Now, everything in business is the net, right? Is it, are you in the red? Are you in the black? And yes, if you have employees, you're going to have to give money to them on these qualified plans. Qualified plans are anything that the government, the IRS is giving you tax breaks on basically. So pre tax, Roth, that's all considered qualified. And there's fairness rules. That are involved in those. So no offense to business owners, but they don't really care about you. They're giving you the tax breaks. They care about the non highly compensated employees. So anyone who earns under 155, 000 and is not an owner or a relative, all those annual testing fairness rules that we talk about, it's all geared around them. So we have to give them something. And the idea is to, let's give them the bare minimum if the overall goal is to stockpile for the owners. So, you did mention for the fairness rules, non highly compensated is 155, 000 a year. Is that kind of your benchmark for a high earner as well? Or do you have a different number? So I would say no on that because when you're looking at let's say you're in the 150 realm, right? And a lot of this, a lot of this is dependent on how are you filing? Are you filing as an S corp? Are you just doing LLC, you know, Schedule C? so let's just say 150, 000. Okay, let's just say that's your, net revenue, right? And you're filing as an LLC. That's what you're bringing in. And, how do we max out? How do we maximize that? And we're going to probably do, and let's assume we don't have, do you want to assume we do have employees or do you want no employees on this scenario? Yeah, let's assume some employees on this one. Okay. Yeah. And, and the term highly compensated employees, since you brought that up too, Is it's up for 2024 it's 155, 000 2023 is 150 and it's always retroactive to the previous year. So this year's highly compensated employees are from last year's calculations or a 5 percent owner is also, or more is considered highly compensated regardless of how much you pay yourself. And then like the kids and spouses are also considered highly compensated. So those are in one. And then everyone else is in another category is assuming they're eligible, you know, full time employees which is a thousand hours or more, which technically if you do the math, it's 20 hours a week. So whatever, anybody over 20 is eligible. Now with employees we're going to want to do a safe Harbor because the safe Harbor 401k is It bypasses some of those fairness rules, the annual testing requirements. And the way the concept is, is the IRS says, okay, if you choose one of these pre approved matching investing schedules, check, you pass these tests. And now you and your highly compensated employees are allowed to test. Max out as an employee contribution. So which is that 23, 000 that we all know and love, right? So that's 23, 000 straight out of your paycheck, basically. Whether you are filing as a Schedule C or a, an S corp, 23, 000 employee contribution. Okay. Now, above and beyond that we're going to do profit sharing. And when you put those two buckets together. You're allowed to put in 69, 000 as a, in 2024. Now, profit sharing isn't as easily calculated as the employee portion of that 23, because that difference of whatever that is, 45, 000 or so is is there's a, you're not allowed to do more than 20 a rough, when you're filing as a Schedule C, it's around 20 percent of your payroll. Okay. So if you're going, if you're doing 150, 000 20 percent of 150, 000, what is that? What's 20, 000, 30, 000, 35, 000 or so. That is what you can stack on top of your 23, 000 total for your own bucket, right? So we're looking at 58, 000 or so. So you're not, you're not quite at that 69, 000 but you're getting to that 58, 000. And that's how you maximize you as an employee. Now, what you're going to do is how do we minimize the other employees, right? So you don't want to give everyone 20 percent of their pay, right? Or 20, they can put in whatever they want in the employee bucket, right? Up to 23, 000. But there's certain safe harbor options that we want to use and it's called a non elective 3%. Okay, so there's matching where if an employee puts in 6 percent You're going to give them three and a half or four or five whatever there's different bestings There's different matching schedules, but the one that is the most efficient Is called the non elective 3%. And that goes to everybody who's eligible, including those who don't put money in. So if they're eligible, you're going to give it to them. So depending on the employee pool and the company makeup, it most might not make sense. But the reason you do that is when you're looking at those, that three layered wedding cake, right? We're talking about the bottom layer is the safe Harbor 3%. Now we want to get into the profit sharing. Now there's a 5 percent gateway that you have to give everybody as private sharing. Even if you give yourself the majority of it, you have to give everybody five. So when you use that not elective, that 3 percent actually goes towards that five. So you're still giving 5 percent to them no matter what, right? But if you did a match instead, so like a 4 percent match versus the 3%, you're going to stack the four on top of the five. And now you got to get nine. So efficiency five is less than nine. Obviously let's go with the five. So that's a way to do that. maximizing and, designing each layer to get the layer above it to be more efficient. And then there's another layer, there's multiple layers of that, where you can get cash balance plans. You can get into, non qualified retirement plans, or if you want to focus on only one person, and not have to worry about all those fairness laws. And, that's where you can get well into the six digits. if you do a cash balance plan, which is a form of a defined benefit plan pension, it's kind of like a casual version of a pension, if you will. There's a balance, and you can shut it down and just roll it into the 401k. but if you're, if you have a client who is nearing 60 in their sixties, they're able to put in 300, 000 pre tax into a cash balance plan. That's where the real, real high level stuff. And then there's, you know, you can add a non qualified on top of that, even, and they get substantial savings. And there's this working with, business owners and, and entrepreneurs, who have multiple businesses. There's this point where they get, where the taxes kind of get out of control. And you know, there's only so much you can do without having to give it more to your employees or if they're really high level, you know, surgeons sometimes that we work with and they're, they're, they're creating these. High level plans, but then they're still making a lot more. What do you do with the rest of it? That's when you get into the non qualified plans and it's called section 162 where you can focus just on yourself. Instead of giving it to the lot of everyone else. So yeah. So when you were talking about the fairness rules, does that pretty much apply to setting up a 401k and then the non qualified plans are like, No so yeah, Qualified versus Non Qualified. Qualified is anything with a tax break. So it'd be the 4 and K profit sharing, cash, you know, pensions, cash balance plans. Those are all considered Qualified. And Non Qualified, you don't get that upfront tax break on Non Qualified, but, it's, there's multiple ways. I just did a seminar yesterday on this. And there's multiple ways to get the money out of the business in order to do that. You can either target key employees, like if you have a succession or a successor to your business that you want to make sure they're taken care of and you want to hold on to them. That's the only person you really, really want to take care of in that situation. Where everyone else is getting the regular 4k, maybe profit sharing if they, if that's wanted. But you want to focus on this one person or you as the owner, you want to focus on you. You have to go with the non qualified option and section 162, and you can get into, uh, even deferred compensation. If you've heard of that terminology and those are, that's a really high level Opportunity past that cat. It's like the opposite side of the spectrum of a cash balance plan. So you want to put in a lot, six digits into that. You can either focus on just you, or if you want to give it to the other, give it to everyone else. But generally speaking, it's, it's pretty efficient when you do it the right way. It's not it's, it's, there's two kinds of there's multiple kinds of plan documents when you get into the foreign case space. So a lot of the direct consumers that you see online. You know, the guidelines, the ADPs, the payroll companies that offer them betterment, human interest. They're using prototype plan documents, and those are like plug and play, like write in your name here, write in your business name here, and here's your 401k. Not a lot of customization there when you get into the custom plan documents or non prototype plan documents, that's when you get really, really creative, and that's the kind of stuff that we do. Okay. That's helpful to know. So, can you explain kind of, so we talked about plans with employees. Can we go now switch gears and talk about plans without employees for our single owners over here? Yeah, those are easy. Yeah, those are, those are the easy ones. You don't have those fairness rules. The only thing you have to do, so solo 401k is now what we're talking about, and a solo 401k, the only time you even need to file a 5500, which is the annual filing requirement for a 401k or profit sharing. You don't even have to do that until you hit 250, 000 in that, in that account. Prior to that, there's nothing, there's no filings whatsoever in a group plan. It's day, day one, year one, you can have a dollar 50 in there and you still have to file a 5, 500. But the. It's the same concept that three layered cake, right? And I call that like your retirement plan stack, you know You add a layer as you need a layer as you need a layer and you just keep building that and building that and it's the same thing except you're using solo 401k it's much easier to max that out because you don't have to worry about the other folks with how much you have to give them the net You know, you're in the black 100 percent instead of in the netting down a little bit. So let's use this one and let's say you're an S Corp instead of doing LLC in this situation. When you're an S Corp, obviously we have to give ourselves some sort of reasonable salary, right? And that's the biggest question is what the heck is a reasonable salary? What's that definition? But let's just say it's 100, 000, right? And you're, you're bringing in 300, 000 a year and your reasonable salary is 100, 000. Everything in the 401k qualified space. Every calculation is based on your salary, not the distributions. Distributions are, are, are not considered earned income in this, in this space, like kind of like if you're in retirement and you're taking withdrawals from your IRAs in retirement, that's not earning, you're still getting paying income tax on it, but it's not earned income in order to contribute into a qualified plan, you have to have earned income and it's, so instead of about a 20, 20 percent calculation on your private sharing, it's now 25. So the 23, 000 as an employee of your own company. And then you're going to add 25 percent of the 100, 000 salary you give yourself. So 25, 000, now we're at 48, 000 is the max. Okay, so the S Corp, yes, it saves you, you know, the self employment tax, the FICA tax, but at the same time, it hurts you on what you can contribute into the plan because you cannot count distributions in any of these calculations. So, if you want more than the 48, then we have to go into one of these more advanced programs. Uh, and this happens a lot when, someone is, there's, you know, there's a lot of, there's multiple sources of income in the family, or there's multiple, or you have multiple companies, or you have, or you have a day job and they're offering a 4NK and yours is kind of like a side hustle, and how do we just stockpile as much into the 4NK and the profit sharing? I live off of my salary at my day job. So these are all things that you know, go into the deciding factors. And a consultation is super important. And yes, that you can, you can do a lot of learning on your own and trying to really figure out what's available, but there's so many little. Nuances and loopholes in gray area. Sometimes just a phone call makes the most sense just to figure it out. And it gets really, really complicated, but this S Corp is kind of difficult. Um, cause sometimes it's like you're paying yourself 30, 000. So what I'm hearing is like another vote for waiting to set up an S Corp until you've covered all of your bases and figured out kind of your strategy and your goals with your money. Yeah, which is kind of what I recommend anyway, because a lot of people get sucked into this, like, I almost want to call it a fad, but it's been around forever of just electing S Corp status to save money on taxes. But, the tax pros that are pushing this aren't looking at the whole entire picture, right? If they're not looking at the retirement plan and all of that in conjunction with the tax savings of the S Corp, like, it might not make sense. So. So yeah, so what's the difference? So you said solo 401k and I want it for any listeners that are kind of like a little newer to retirement lingo. Can you explain a solo for, like, explain a solo 401k as opposed to like when, uh, When you actually don't have that option anymore. When you need to, yeah, when you need to graduate, if you will, into the group. So 401k is a 401k is a 401k. It's all about how it's tested. And how's the administration, how's the compliance around it. It's all the same tax code. so when you're solo, you have part time employees that are under a thousand hours a year, you can go that route. There is a rule there where they, if they're with you for three years, it's coming down to two next year. I think it is when they change the laws on that. But if they're with you for , two years and they're 500 to a thousand, they will then be eligible as well. or your spouse, if it's just you and a spouse. That's still considered solo. You're okay doing that. But once you start, once you get that one W 2 employee, 1099s don't count. They're their own, they kind of run their own business, basically. Once you hit that W 2 that's a thousand hours or more, you can, you then have to start looking at the group plan. And even if it's one it has to be a group plan. If they're not eligible, this is really important. If they're not eligible, you can still do the solo, even if you do have a W 2 employee and they're not eligible. So if they're under the thousand, you can still do the solo. If they're over the thousand. You have to start thinking, how do I want to make them eligible for the plan? And the rules are, you can go as far out as a year on your eligibility. So they have to be with you for one year in order to allow them their own money, put their own money into the plan. So when you do it that route, you can say, okay, I, I hired this person in March, I can finish 2024 as a solo 401k and switch in 2025 when they're eligible. So that's a, that's a big strategy there. And, and beyond that, you can even do semi annual enrollment periods. So you can do, you can do instant enrollment. You can do monthly, semi annual, whatever you want. Semi annual is as far as you can go on that. Meaning. January 1st and July 1st is when they're allowed into the plan during the year after they're eligible. So if you plan it right let's say they're hired in the second half of the year in 2024, then you don't have to worry about, so it's one, let's say it's August. So a year from August is August and then they would have to wait until January 1st of 2026 to be eligible. So then you have two more years. So there's a lot of strategy and it's all dependent on how you answer that first question. Is it for you or is it for your employees? What's the goal here? Gotcha. And then, so if you are on a solo 401k and you are hiring and building a team, that's something to think about talking with your plan administrator about changing to a group plan, right? And is that a difficult process? Yes. No, the plan actually doesn't even change. The plan document, when we do the plan document, we try to look, we first see that down the road. We kind of see what's the growth of the company, what it's going to look like. Can we go ahead and put something in the document that identifies that, that eligibility in the future. But at the same time, that's, sometimes that just happens. Most of the time it just happens. You don't know. You're like, I actually need someone tomorrow. And then you hire somebody. And you just, you have to amend the document. Our company does not charge for any amendments because it's part of the natural flow of business. If you want to have growth in the business, I think we all want growth in our business. Then you need to be able to make that change and we don't want a fee to get in the way. So you have to do it that way. You have to do it that way. And and you just alter, do a quick amendment to the plan and move on. So talking ahead of time. is really important because once they're hired, they're hired. So we have to adjust that and make the eligibility. It's better to know ahead of time, which we usually do. We all, anytime we do a a solo 401k, we most often will say one year eligibility. Six month enrollment, almost every single time, because we don't want it. You can amend a plan mid year when it's an improvement to the employees, but if it's not, then you have to wait until January 1st to do all these dinner notices and things like that. So it's better to make it, push it out. It's also a good strategy if you're not sure. If they're even going to reach the thousand hours or like, if there's going to be turnover, you know what I mean? Turnover is big. Turnover is a really big topic right now that has to do with your vesting schedule. And there's a lot of strategy around your vesting schedule. Especially if you're not doing a safe harbor or you can't afford to do a safe harbor because the annual testing, if you've heard or a lot of people have heard about where you get a check back at the end of the year, especially employees will get a check or an owner will get a check because they failed their annual test, right? This is if you don't have a safe harbor, you have a traditional. And the reason you want to go, you would want to go with traditional is because you want to mold the plan very specifically. So, like I said, safe harbor is turn key options. A traditional is you can mold your vesting and matching schedules and to within limits to kind of however you want, but the rule on what the owners and highly compensated are allowed to do is there are only a lot of things. This is kind of a rough calculation, but it's 2 percent over what the non highly compensated are doing, even if it's a zero. So if, if you have 10 employees, half of them are zero, half of them are 10 percent is what they're putting in their own money. That's an average of five. And you're only allowed to put in seven, 2 percent over that average. And if you're paying a hundred thousand dollars salary on yourself, that's only 7, 000 in your foreign K out of the 23 that you're allowed to do. So that, so what we will do there is we'll create a match that's really spread out. As long as we can. So like 25 percent on six or something, cause we want to get them to put in as much money as we can to push out your contributions and then the vesting schedule is all about, it's really about protecting cashflow and protecting the assets of the company. And you can push those out as far as six years on, on both your 401k and the profit sharing and the cash balance plan piece. Okay, so when does it make sense to have, like, instead of a 401k, a SEP or something like that? Yeah, great question. It's all about that second question, is how much do you want to save? And we're, we're not a all things 401k shop by any stretch of the imagination, it's which one makes sense. So we, anything for business owners is really what our goal is. That's how we look at it. So if you're a solo, so let's say you're a solo entrepreneur, you have no employees and you want to put in 6, 000 a year, that's what your budget is, then just do an IRA, a Roth IRA, don't, don't even tie it to the business at all, just do the IRA. It doesn't matter. Because once you go into the business accounts, there's a little bit more headaches coming into play. But here's kind of a rule of thumb. If it says IRA at the end. Administration. There is no administration costs. You don't need to be, you don't need to hire the administrator. If it says 401k at the end for profit sharing, then you need an administration company to do the annual testing and the filings and things like that. So if it's, if you want to do 10, 000, you know, then you can say, okay, SAP, but that's all dependent on how much you're paying yourself, right? A SAP is basically a pro a, a simplified version of profit sharing. That's all it is. It's the same exact limit, you know, 69, 000 for 4nk and profit sharing or all profit sharing is 69, 000, and the SEP is 69, 000. It's just the calculations. There's, there's a lot of advanced profit sharing calculations that you can stack on top of 4nk, where you can target people. When you go with the SEP IRA, then it's whatever you give yourself, you'd have to give to your employees. But the calculations are very simple. So if you're, it's 25%, if you're an S corp and around 20%, if you're not staying calculation, so if your 10, 000 contribution goal that you want to do for that year calculates out within the ZEP, do the ZEP, do a simple IRA. Do it. You know, the simple IRA even works. You can, you can do a simple IRA with no employees does not matter. So it's, once you hit that, like, I want to put in, 20, 000, but you're kind of hindered because you are an S corp and you'll, you know, you want to you're not able to put in, you know, max out in the calculations for foreign K or all, whether it's solo or group are way more favorable because of that employee contribution of 23, 000. It's a hundred percent of your pay. You know, that's a huge calculation boost, if you will, when you do the foreign case. So if it's within the amount that you want to budget into contributions, no traditional, go simple IRA, go SEP. Once it gets above that, then you can graduate into it. And there's a lot of, a lot more conversation around that too, but yeah, don't, don't overdo it. You don't have to overdo it. So basically the way the SEP works is. You really only recommend it if you're able to contribute more than the maxing out your own IRA, right? So more than 6 it's 6, 500 now. yeah. So if you're able, willing and able to contribute more than 6, 500 and you want to, a SEP might make sense. However, what you're saying is if you contribute, like say I've already contributed, I've already maxed out my personal IRA, That's 6, 500, but the business had more income, I have cash left over, and I want to contribute another 10, 000. I would need a SEP for that, but does that mean I have to contribute 10, 000 to my employees as well, or? It has to be a very rare occurrence for that to work out where the set makes sense for the if you have employees, I would honestly probably say, let's just do product sharing plan. But the reason is yeah, it's, it's not 10, 000. So if you give yourself, it's based on your salary. However, if you're an LLC, you don't have a salary. Okay. Yeah, but it's based on what you pay them. Okay. So it's like, it's, there's a lot of, yeah, a lot of people think you can't even do employee contributions if you're just an LLC because you don't have a salary, but you can. Okay. Is it based on how much I take in draws then? No, it's, it's, it's, it's just based on your, your net, your net. That's all it is. So, okay. Yeah. It's, it's it's still coming out of the corporate account on both. It's just tagged as employee contribution. So you can absolutely, even if. So, that, I'm glad you brought that up, because that is a, a big misunderstanding out there where if you're not paying yourself as an employee, meaning S Corp. You can only do the employee or employer contributions, which is SEP or just profit sharing. That is not the case at all. You can do both. You can still do both. It just comes out of the same account and it's just earmarked in the plan as employee versus employer. if my net profit is 50, 000, that's what they're saying. That's basically, that's my salary amount, right? Whether I took it or not. Exactly. Exactly. Exactly. And so that's the number that we're using for a calculation on the SEP. So then if I want to put 10, 000 of my wage of the 50 grand, I don't know what percentage that I'm like to 20%, right? Yeah. 20%. Yeah. Which is the max. That's the maximum you're allowed to put in if you're an LLC and you're filing as a Schedule C. So then I would have to also contribute 20 percent of my team's salary, correct? Correct. Exactly. Whatever you're paying them. Yeah. So that's, that's a so when you're, when you go to the, that route, then like 10, 000, right. That's the goal. You can either go all profit sharing instead of SEP, which takes administration, but there's different ways to do profit sharing. There's, I would just keep it this. There's about four different kinds of calculations and some of them you can even remove the terms, because I'm already getting high commissions or things like that. Those are, it's called new comparability. It works out sometimes, sometimes it doesn't. But in that exact instance, if you had employees when you pay yourself 50, you want to put in 10, Simple IRA definitely is the way to go. Because you can put up to, what is that? I mean, you know what the limit is these days, 16 or 15, five, I think it is for simple IRAs now as an employee of your own company, you can put it up to that amount so you can actually do better with a simple IRA. And that's, that becomes a deduction for the business as well. And then all you're doing is giving 3 percent to your employee out there and you're giving them 3 percent instead of 20. Because that's the match in as simple as 3. Or 2. You can give a 2 non elected contribution as well. So again, it's like question is dependent on how you file and what your specific numbers look like. How your employee makeup looks and what the net, what the net is. Yeah. Okay. Some stuff to think about. Sounds like I need to book a consult. There's a lot to it. And this is the biggest piece of advice I give to everybody out there is don't wait until the last minute to look into this because it is so vast. The retirement plan space is so, so vast. we teach financial planners this, we teach CPAs this, we teach bookkeepers all this. We, we, we teach everyone in the, cause it's this corner of the industry that is so complex that if you don't have a main focus on it, you're missing out, you're missing out. Yeah. The basics we'll check off. Yeah. I have a four and K, but there's so many little nuances that you can and can't do. And so much gray area that you can work around and, and make changes to, and, sometimes it's one kind of creative plan design that we use, and I guess I'll just kind of leave this as a creative option is you can cut out highly compensated employees from a safe hardware and still pass your testing. So sometimes we'll say, okay, let's say there's three owners. And 10 staff, but the owners are don't really, they're like, well, they don't care about matching themselves. They just want to max out the 23, 000. They don't care. You can, you can cut out your highly compensated and ownership from eligibility from the safe harbor. So the safe harbor, this is a great example of why the IRS does not care about that, as long as you have the safe harbor for the highly, for the non highly compensated, they're, you're getting, they're getting what they need to, the owners, even though they're not matching themselves, they can still max out. 23, 000 because they don't, they don't care. As long as you're giving the employees the safe harbor option, it does not matter. So and you can cut out all, you can cut out or if all your sales staff gets paid really high commission, they're all over that nine, that highly compensated level, you do the same thing. so there's so many different nuances. It's not like, one size fits all by any stretch of imagination. Yeah. Awesome. Okay. So if there's, since most of my listeners are bookkeepers, accountants, CPAs, if someone is like, oh, I need to connect with you for my clients or for education, what are their options and what's the best way for somebody to reach out? Yeah, so we have, so we have, our website is lifeincrs. com, and, you can also do 401k. expert, and it gets you right to the same site, it just forwards on to that, and for accountants and CPAs and bookkeepers, we have a partners page. where you can go in there and just book consult with me or somebody else, that's available. or you can always email me, at max. rutberg at lifeinkrs. com, very long email address, but you can connect with me straight through the website as well, at 401k. expert. And keep the life even more simple. And so how do you work with bookkeepers and accountants versus the business owners? Like what's that? Yeah. Partnering look like? It's all about open communication. We asked the client that we can have a conversation with the bookkeeper and the accountant giving access to, you know, third party access to folks. And we even offer referral fees for, for bookkeepers and, refer, just partners in general. we offer referral fees too. So those are, that's kind of a way to connect with us or, or work with us. But the main thing is communication. We love talking to accountants and CPAs and other partners because it's, it's a big, it's all connected. We're just one cog in this whole thing. So, you know, a lot of times after the tax season's over it's good to say, Hey, we have, my client has this much, money that we need to get off the books, how do we do that? And how do we get most of it to the owner? and it might be a different calculation for product sharing this year than it is last year. So there's different ways, again, no, no plan, no fees, because that's. That's, that happens. That's the goal. Everybody wants to put more money into the plan. and then for solos, open communication. You know we, we are the busiest out of the year for solo 4NKs. the week before New Year's. Oh, because the deadline is actually the end of the year on that one, yeah. Yeah, and actually I want to bring up something else. The deadline for your employment, you know, it's, it's, what's your salary? You gotta finalize your salary. Do you need to do a spe It's okay to do special payroll runs at the end of the year to be able to do all these things, these calculations. But doing it not the last week of the year, doing it maybe the last month of the year is best. December would be great to really start planning ahead on that. and as far as like solos, there's some special rules that just came out I want to mention really quick. Especially right now. Let's talk about like the deadlines on some of these, right? The employee, traditionally the employee contribution is due, you know, just slightly after the end of the year, right? That 23, 000 is due just, you know, not too far past the end of the year, but you know, whatever that last payroll run rate is. As long as you're an LLC, that the first year you do a solo 401k, the very first year, the employee portion is not due until the time you file. Normally it's 1231. And then the employee er contributions. are pushed out all the way until you file, including extensions. So September, October, whatever that is, it can be pushed out that far. And same goes with the proof of warrant case. Okay, awesome. So if you have not filed your taxes yet, and you're like, oh my gosh, you have this big tax bill as of, you know, before you file look into it and see what you can do. Yeah. That's super helpful. So, um, I had one more question and now it's escaping me. Oh, well. You can ask me later, no problem. Yeah, I probably will, but thank you so much for sharing all this valuable information. I encourage all you listeners to connect with Matt. Connect your clients with him, especially if they are making a lot of money and they're trying to save on taxes and also set up their futures. It's a conversation you should be having with your clients for sure. And clients tend to ask us these questions anyway, cause they just assume anything money related that bookkeepers know. And I always say that we're like the first line of defense for a lot of things. It's a great when the clients do ask us questions, because then we can connect them with people like you. And we don't have to know everything. Right. Right. So, yeah. I'm a huge proponent of, creating connections with different finance aspects for your clients so that you have a point of contact and Matt's a great one to have in your back pocket. Any other questions? Recommendations or mistakes you see made that you can maybe impart some wisdom on us. Yeah, just, just it's that filing deadline. Don't, don't rush to file. Sometimes if you have questions, we have a good catch bill. Just don't, don't rush to file. I see it all the time, this time of year specifically where they want to get it done and get it off out of the way. I know not all accountants and CPAs want to see everyone just. You know, file an extension, file an extension, file an extension, but let's put it this way. When you file an extension, yes, you have to do that estimate and pay your taxes around, you know, but the deposit is still not even, it's not due. You can implement and contribute all the way up until the day you file with the extension. You don't even have to implement any more. This is a secure 2. 0 rule. They push that all back. Cep was traditionally the only way to do that, the Cep IRA, but now all foreign Ks can be, pushed all the way. There's so many loopholes. I'm telling you, there's loopholes. Just ask. Just ask the questions and we'll see if it works. If it doesn't, then no one's hurt. Okay, I just remembered my question. Go for it. So in a situation where there's multiple businesses and one business entity does not have employees and one does, are you still bound by, if the owner is the sole owner of both entities? Are you still bound by those rules? This is a fun conversation that I like to have. So it's extremely complex. Um, yes, so double the episode. No, I'm just kidding. No, so you're, now you're getting, it's called controlled group rules. It's, you are now, you're considered a controlled group. And this is a sometimes a, a, not the greatest conversation we have with clients because they're like, I have to give this much money, but if you own a hundred percent of two companies, one has employees, one does not, you're given the, whatever you give yourself, you can't bypass the employees and do a solo. If that's, you know, that's kind of the idea, right? There's a lot, there's a couple rules there. One is a 50 percent rule. So if you have partners with the employee, with the ones with employees, and you're maybe 30%, check, you're fine. You can do this solo. But if it's the other way around, then, no, you can't bypass. There's a, and one rule is, is that's quite common, is the Affiliated Service Group rule. And this is like doctors and attorneys do this a lot where there'll be a partnership, there's partners involved. So let's just say it's a 50 50 partnership. And they, LLCs and that's how they pay themselves, right? They can't go and open a solo 4nk with profit sharing and cash balance plan and give everyone else the employees nothing. You know, you have to, you have to have the exact, whatever you give yourself, you have to give them. You have to offer them the profit sharing, you have to offer them the cash balance plan. So there's a lot of rules, it's called control group, and it's it's a very, very, very black and white rule, and if you get audited, it's, they're, they're gonna come get ya, and you'd have to basically give all your employees what you owe them, moving forward, so, and looking back. Just making sure. I'm not, but it's like, I do own two separate entities. So I was like, if I have this question, I'm sure someone else does, or they have a client with multiple entities and the client's like, I can just do a solo 401k in this business and not do anything over there. it's part of our intake. Let's put it this way. It's part of our intake to make sure that we have, we know all, all things, business, but, and sometimes you want to have a control group. And this comes in with like. say the, two spouses own two separate companies and, we're able to, commingle the plans together so you don't have to double pay all the administration and all the filings and all this. It's just done under one umbrella. because, you know, you can connect, if your spouse has a managerial role in your company and does a lot, even though they're not on payroll, it's connected. It can be connected. and sometimes, it allows you to include income from the other business that you wouldn't be able to before, higher contributions, higher calculations. So, there's a lot more to that, but that's kind of like this ballpark answer for you. Awesome. Okay. My last question is what is your fee structure? Like when you work with people, do you do a flat fee? Do you, are you more of a cons, a consultant or is it like a commission structure? Can you share that? Yeah, good question. So, so there's three roles to every 4nk plan. I'm just going to kind of start there. We're there's the administration, the compliance and the filings and all that. That's the administration. There's the investment fiduciary, and then there's the custodian slash record keeper, kind of synonymous there. we're purely independent on the record keeper and custodian because everyone has their own niche. Some folks, vanguard, fidelity. Not great to go to directly. but there's ones that you've never heard of, like July services, Alaris, then there's John Hancock. They all have their niche. Some like a lot of money, some like a lot of employees, and some of them like. a lot of flow, like a lot of money going into it. So we handle, sometimes just the administration side. And that third piece I didn't mention is that, is that investment fiduciary who is acting as the investment fiduciary on the plan, who's choosing. the investment menu for your employees. And if it's not a financial advisor can sometimes plug in. we are the, we act as both the administrator and the investment fiduciary on majority of our clients. But if we partner with financial planners or something, then they will. the key is if the business is doing it, if the owner of the business is doing that, they are acting in, The eyes of the ERISA and our labor as the financial advisor for the employees, it's not a good idea to be your employees, but so it's good to off, off that liability to somebody, whether it's us or a financial advisor. So, the administration side is flat fee. based on participant count. and that's it. and then the investment fiduciary side, is usually depending on how, what we're doing with it, is usually a percentage of assets, on that. And then, and then the custodian again is we are very neutral on that. And we are, we are on the same side of the table as the client. So it just depends on where they want the things invested. And that's what you're saying. A lot of it goes into, you know, what kind of investments do they like? Some have open architecture and some of them don't. Open architecture means we have the world of investments to choose from. And then we even do, we do self directed. We do a lot of self directed. Where the employee, where the employees have a menu. And the owner has a self directed brokerage account. And we even put real estate inside of this thing. We can literally do it. We have some that will allow cryptocurrency and some that don't. It's just, it depends. There's so many, we have dozens and dozens of them and they're all, they all have their own fee structure. We narrow it down to three usually. But at the end of the day, the, The IRS wants you to benchmark your plan every three years or so for the custodian. So if, and that's for your employees, so they're not paying high fees. So we do that automatically for our clients because we are neutral on that. And you can start with a lower cost provider because they love startup plans. And when you get more assets, then, if you have a million dollars in the plan for your company, that's a huge pricing tier break point. And we move it. And we negotiate with you and do all these things. So it's, it's something that, again, if you have like your 401k with your payroll provider, like ADP or Paychex or something like that, they are who they offer themselves, right? They're not going to benchmark for you. So having that neutral, that shift away. Integration is easy in 2024. Payroll integration is easy with 4nk in 2024. You don't have to have your 4nk with your payroll provider to have that integration. It's technology is there to do it across the board. So you don't have to worry about that. Okay. when you say neutral, does that mean like Say for instance, I have accounts already at Vanguard and Schwab. Does that mean like if I'm like, Hey, I just want to see the plans that are available at Schwab so that all my stuff's in the same area? Yeah. Yeah. Good, great question. So actually some of the record keepers looking at it this way, custodian is like the basic level and record keepers, like the higher level of when they need to do a lot more, you know, you're tracking more, you're tracking them. Pre tax and Roth and match and vesting schedules and all that and that's not done on a street level of Vanguard right or Schwab So if you want to have all those over again, you can do self directed easily or Some of the record keepers use Schwab as their custodian, as the, as the custodian, , are they the best? No. Like people, Vanguard is such a hot custodian these days, right? Everyone loves Vanguard. If you go to the Vanguard and try to open up a 4NK, that's not solo. Solo is a whole different story. That's like DIY, do your own solo. It's fine. If you do a group 4NK with Vanguard, it is going to be the most expensive plan on the market. And if you don't have, I think it's 4 million. In the plan, they don't even do it. They white label another record keeper on the market that we use just directly. And they just answer the phone as Vanguard. and it's not actually with Vanguard, but if someone loves Vanguard, there's cheaper record keepers that have that open architecture method that we have absolutely designed an all Vanguard lineup inside another custodian. Okay. It's all, it's the same six to one half to the other. You don't have to go to Vanguard to get Vanguard. Okay, awesome. This is all really helpful information. I hope other listeners are getting out as much as I am. Okay. So, kind of just did part two of our little interview, but again, for anyone who wasn't listening, you can contact Matt hook your clients up with him. We'll have links in the show notes and Give them a call yourself, set up a meeting and figure out your own retirement stuff, set your goals and get things set up for 2024. Absolutely. We just scratched the surface today, so there's so much to talk about, but reach out anytime. Yeah. Thank you so much for your time. Thank you so much.