Ran through the blocks, now I need direction.

[HumbleInvestor]

I am a newbie here and have been reading up as much as I can. I own a small private practice setup as a S-Corp PLLC with about 10 employees and couple of 1099 ICs. My spouse who is managing the practice and I get paid on W2 but a good portion of the profits are passing through as a distribution. So far we have not done much financial planning and only paying our IRA's as we did not yet setup any 401k at work. We have a CPA that primarily does our book keeping but has also filed our taxes over the last couple of years. Other than the Section 179, business loan and home mortgage interest deductions, it does not appear we are taking advantage of opportunities as we are phased out of most other deductions/credits and the tax bill has been huge (I think 30-35% fed tax rate). I have been aggressively paying off the higher interest business loans and paid off 3 of the 4 loans I took in the last 5 years. I paid off my student loan and still have about 1M in debt left between the business, mortgage and car loans etc. We are 35 & 40 and have two young kids in elementary school but have not setup any funds for their tuition.

I understand setting up a 401k at work is slightly more complex and with 10 employees I may be looking at a good chunk of expense. I am interested in setting it up either this year or next year. Are there any alternative deferred tax retirement plans at an individual level that I can setup more easily?. Are there any recommended fee only tax strategist/financial advisers in the Seattle area that setup the structures so I can manage them afterwards?

Appreciate your advise.

HI

[jfoxcpacfp]

You might want to start with a SIMPLE IRA plan this year. You won't get the larger amount you will with a 401k, but you'll only match up to 3% of the wages of each employee that chooses to participate and the administration is much easier (no IRS filing required). It sounds as if you are doing well with your debt but it's hard to know what else to advise without details. You definitely should be working with a fee-only financial planner who is also experienced with personal/business taxation. Are you set on working only with a local advisor?

[HumbleInvestor]

Johanna, Thank you for your response. I am not set on working with a local advisor, though it is handy to have a in person meeting every now and then. I am thinking of setting up SEP for last year as I could still do that and possibly look at SIMPLE from this year onwards.

[jfoxcpacfp]

HumbleInvestor wrote:

Johanna, Thank you for your response. I am not set on working with a local advisor, though it is handy to have a in person meeting every now and then. I am thinking of setting up SEP for last year as I could still do that and possibly look at SIMPLE from this year onwards.

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You'll have a better chance of finding a good fit if you don't limit your choices to local. Plus, you can still have virtual f2f meetings - eventually, you don't notice the difference.

I didn't mention a SEP because of your concern about expenses. Just remember with the SEP that you will have to contribute the same % as you do for yourself for all employees who are age 21+ and have worked for you in 3 of the last 5 years.