00:00 Speaker A
IRAs and Roth IRAs. What is the difference and how can you use them to save?
00:07 Speaker B
Yeah, absolutely. Now is the time to start thinking about 2025 taxes, right? Because most people don’t take the time to start automatically setting aside for next year. But if you can, try to do that. The first way, as you mentioned, the individual retirement account is where you can set aside pre-tax uh money into this uh account and individual retirement account up to for next year as well as it was for this year. It’s $7,000 unless you’re 50 or older and you can throw in an extra thousand. Um the Roth IRA is uh you don’t get that upfront tax deduction. But when you take that money out uh at retirement if you follow all the rules and and income limits, you you take that out, you don’t uh pay tax on that or on the gains of it. So that’s a really sweet thing if you don’t need the tax deduction right now.
00:57 Speaker A
So what about a simplified employee pension plan?
01:02 Speaker B
Yeah, that is really if you’re self-employed, um it’s a great way to actually set quite a bit more aside for retirement than that limit for the individual retirement account. You can get up to 25% of your compensation you can put aside in a set. And so, when I was freelancing and ran my own business, that’s what I had. Um that’s a great way to give yourself a little more oomph in your savings.
01:33 Speaker A
And then lastly, while we have you here, there is something called a solo 401k. Okay, so break this one down for us.
01:44 Speaker B
Yeah, I think they’re fantastic. I think if you have the opportunity, you have to have this set up by the end of the year, of the tax year, so by December. And this gives you even more flexibility to set money aside because you’re making contributions to this plan as an employer and as the employee. So, um it gives you even more flexibility than you had with the set uh retirement plan for self-employed. So um I encourage people to look into it, talk to perhaps your tax consultant about it, but a solo 401k can give you a lot more flexibility and a lot more savings.
02:25 Speaker A
Carrie, thanks so much. Great breakdown. Really appreciate it.
02:30 Speaker B
Thank you.