If you’re a small business owner setting up a solo 401k, chances are you’re running an S corporation—and that means your W-2 planning over the next few weeks is critical.
Here’s the part most entrepreneurs miss:
On your W-2, you must designate your intended 401k contributions for next year.
You don’t have to fund them yet, but you do need to earmark:
• Traditional or Roth
• How much you plan to defer
If you change your mind, you can amend the W-2 later. But getting it right now means:
• Clean payroll records
• No headaches with your solo 401k
• Maximum ability to contribute when you’re ready
And don’t forget:
You may qualify for a tax credit for setting up your solo 401k.
File Form 8881—your tax advisor should know it.
But if you’re not talking to your advisor (or you’re using DIY software like TurboTax), you may miss out entirely.
When you’re making real money, self-guided tax planning can cost you far more than it saves.
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