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No Employer Needed
What’s Poppin’!
This is the Budgeteer Newsletter, where we make you smirk while reading a newsletter about money.
Then your friend says “Who are you texting?”

Today we are bringing you:
No employer needed
Must have travel companion for road warriors
Today's edition is brought to you by Refside. Fun referee apparel for refs by refs.


You know, we've encountered quite a few self-employed folks - the 1099 Independent Contractors - who believe that they can't have a 401(k) or an IRA. But let's set the record straight, that's a total myth! They can absolutely set one up and begin stacking up savings for their retirement.
In fact, there's a whole range of retirement savings options that are just right for our friends on the 1099 path. For example, have you heard about Solo 401(k)s, SEP IRAs, and Roth IRAs? These are stellar strategies for retirement savings if you're part of the 1099 landscape. So, if you or someone you know is in this situation, it's time to kick one of these plans into gear. Ready to take a deep dive into this? Let's get started!
Solo 401k
So, you might have heard this Solo 401(k) thing being called a few different names. Some folks call it an individual 401(k), others say one-participant 401(k), but they all mean the same thing. It's a retirement plan made just for people who work for themselves. You know, freelancers, business owners, and the like. But there's a catch – you can't have employees unless it's your other half.
What's cool about the Solo 401(k) is that it's pretty similar to most people's regular 401(k) at their jobs. You can sock away a lot of dough for your golden years, and you don't have to pay taxes until you take it out. That's like your money having its own little greenhouse to grow in, tax-free. Pretty neat, right?
The Good Stuff:
You can stash loads of cash: In 2023, you can put in up to $22,500 as an "employee" of yourself, plus chuck in an extra 25% of your net self-employment income as the "employer." The most you can put in total is $66,000. That's a lot of moolah for your future!
Your money grows tax-free: Your investments get bigger and bigger, and you don't have to pay any taxes until you start dipping into your account when you retire.
You can borrow from your account: If you're in a tight spot, you can borrow up to 50% of your account balance or $50,000, whichever is less.
You use pre-tax income: Basically, you can lower your tax bill now by putting money into your Solo 401(k).
You're in the driver's seat with checkbook control: One of the coolest parts about Solo 401(k)s is the "checkbook control." This means you decide where your retirement money goes. This isn't just about picking stocks or bonds. You can also invest in things like real estate, precious metals, private businesses, and even cryptocurrencies if that's your jam. It's like having a magical checkbook to buy pieces of almost any investment you think will grow over time. Just remember there are a ton of rules on how you can use this money, so contact a qualified plan administrator to help you with this type of account.
The Not-So-Good Stuff:
Bit more of a headache to manage: Solo 401(k)s come with some extra paperwork, and you have to report on it every year. It can be a bit more painful than other retirement plans. But hey, no pain, no gain, right?
SEP IRA
Now let's talk about another option for retirement: the Simplified Employee Pension IRA, or what most folks call a SEP IRA.
This one is also built for self-employed folks and small business owners. With a SEP IRA, you can put money into a traditional IRA that's been set up for you and any eligible employees you might have. What's great is that they let you put in a good chunk of change, and they're simple to get up and running.
The Good Stuff:
Higher Contribution Limits: Unlike many other retirement plans, SEP IRAs allow for higher contributions. In 2021, for example, you could contribute up to 25% of your income or $66,000, whichever is less.
Flexibility: The SEP IRA is super flexible. You can decide how much you want to contribute each year or skip a year if needed.
Ease of Setup: SEP IRAs are relatively simple to set up and administer compared to Solo 401(k)s, making them an attractive option for small businesses without many administrative resources.
The Not-So-Good Stuff:
No Catch-Up Contributions: Unlike Solo 401(k)s, SEP IRAs don't offer catch-up contributions for individuals over 50. This could be a downside if you're trying to save more as you near retirement.
Less Control Over Investments: With a Solo 401(k), you can borrow against your plan or invest in almost anything you want, including real estate. This isn't possible with a SEP IRA.
Required Minimum Distributions (RMDs): With a SEP IRA, you must begin taking distributions at age 72, whether you need the money or not. But with a Solo 401(k), if you're still working, you can delay RMDs.
Roth IRA
And last but not least, let's discuss another option for independent contractors that is worth taking an extra look.
The Roth IRA is a fantastic tool for making after-tax contributions. It works by putting in money that you've already paid taxes on, and then it grows tax-free. Then, when you retire, you can take out your earnings without having to give a cut to Uncle Sam, as long as you play by the rules.
The Good Stuff:
No taxes when you take out your earnings: As long as you meet the criteria, you can take out your earnings during retirement and not pay a dime in taxes. Sweet deal, right?
No forced withdrawals: With a Roth IRA, you're not required to start taking money out at a certain age. This lets your investments keep growing as long as you like.
You can take out your initial investment without a penalty: Here's a cool thing about Roth IRAs - you can take out the money you initially put in (that's your principal) at any time without paying any penalties or taxes. This can be a lifesaver if you need some cash in a pinch. But remember, it's usually best to let your money grow.
The Not-So-Good Stuff:
Can't put in as much money: In 2023, you can put in up to $6500 in a Roth IRA or $7,000 if you're 50 or older. That's less than some other retirement plans.
There's a cap on how much you can earn: If you're making big bucks (over a specific limit), you might not be able to put money directly into a Roth IRA. That's what they call income restrictions.
So, you're pondering which way to go, huh? If your finances can handle it, here's what we suggest: maxing out your Roth IRA each year. Trust us, maxing out your Roth is like having a financial superpower. It allows you to enjoy tax-free gains and withdrawals later in life - that's a big deal. You're saving up a sizeable nest egg, right? With a Roth, that nest egg could be tax-free.
For example, let's say you're in the 22% tax bracket. To make your Roth contribution, you'd shell out about $1,320 in taxes (that's $6,000 22%). It might sting a bit now, but check this out. If your investments grow by an average of 7% per year, by the time you're 60, that $6,000 contribution would have inflated to roughly $32,071. The best part? You can withdraw all that money without paying any taxes. If you had a SEP IRA or Solo 401k instead, you'd be taxed on the withdrawal. If you were still in the 22% tax bracket, you'd be looking at around $7,056 in taxes ($32,071 * 22%)! So, by paying $1,320 in taxes now, you're avoiding a future tax bill of nearly $7,056. That's the beauty of a Roth IRA!
Once you've filled up your Roth, the following account we'd suggest is the Solo 401k with checkbook control. This account lets you sock away more money than a SEP IRA, giving you the freedom to invest in different types of assets, not just stocks or bonds. Plus, you can take a loan out of your Solo 401k if you face an emergency. Of course, we hope you never have to, but it's always good to have options. A SEP is a good choice, but the Solo 401k offers more flexibility. That's why we'd recommend it.
In any case, those are our thoughts! Remember, your financial journey is your own. Happy investing!


By now, you've probably caught onto our little secret - we're pretty strategic when it comes to using credit cards. We're all about racking up as many points as we can on the regular purchases we make every day. Now, you might be thinking, "Why not just use a one-size-fits-all card that gives 1x points, or occasionally, 5x points?" Well, if you really want to master the credit card game, you'll soon see the need to juggle a few more cards and use them wisely.
That brings us to our latest star player - a card that's a must-have for anyone who's on the road more than they're at home. You might chuckle, as this was probably the first American Express card you ever got. But, after a makeover in recent years, it's now a total powerhouse, delivering an impressive 3x points on a range of travel categories that leave other cards in the dust. But remember, it's really only worth it if you're a frequent traveler, say more than 10 trips a year. If that's not you, don't worry, there are plenty of other cards that might be a better fit.
So, why do we love this card? It's easy - this card gives us triple points for travel expenses. And we're not just talking airlines and hotels (that's where our Platinum and Marriott cards come in ). We're talking cruises, car rentals, campgrounds, trains, taxis, rideshares, tours, ferries, tolls, parking, buses, subways, and even third-party travel sites. Think of this card as your go-to for all those other travel-related expenses outside of what's covered by the Platinum Amex.
So there you have it - our secret strategy for making the most of our credit card points. Remember, it's all about using the right card at the right time!

Read. Learn more about the benefits of the fantastic American Express Green Card
Read. A reminder of our simple approach to creating a spending plan. We love to stick with the 50/30/20 plan, but this is even simpler and accomplishes the same goal
Nothing in this email is intended to serve as financial advice. Do your own research. Thanks for reading, if you have any questions, comments, suggestions, etc. about the email don’t hesitate to send us a reply.