Darren, what a beautiful day, right? Oh my goodness, what are you talking about? I just come in from walking. It's what, 79, 63, but it feels like 70 degrees outside. It's been like 18 or something, yeah, it does, doesn't it? Yeah, it feels nice. I hate you're feeling bad. You're going to give our listeners here everything that they need to know about comparing retirement plans as a 1099 CRNA. You can talk about this on your deathbed, I know. And it is such an important point. I think CRNAs get a lot of misinformation about this. And today, hopefully we're going to dispel some of those myths and kind of talk about each one and what the pros are and cons. And hopefully once they get done with this module, they'll know more than enough to go out and make an informed decision. So we'll kind of kick it off here and talk about a SEP plan. A SEP is a simplified employee pension. And so many times I hear CPAs around the country working with CRNAs saying, oh, you need a SEP plan. The SEP is the plan you need. And I think it simply comes from the fact that they don't know the other plans. Most CPAs don't get into retirement planning and understand the investment side and understand which plan is actually better. They've just gone with SEP for the last 20 years and that's what they tell everybody. The SEP is really, it is a simplified employee pension. It's really an IRA. It's like an IRA that you can do when you're self-employed and put a little bit more money into it. There was actually another version of this and I think they got rid of it. I want to say it was 86, called a SARSEP, which was a salary reduction simplified employee pension. In just a minute, I'll explain a little bit why that is different from the SEP we have now. But with the SEP, if you're self-employed, you can save about 20% of whatever you make being a 1099 CRNA in this plan, okay? Up to a maximum of $69,000. Now, the 20% comes in if you do not have your company set up as an S-corporation, then this is the way you calculate it, okay? So that's a big difference, Sharon. So for you, it would actually be 25% of what we take as a salary out of your S-corporation, okay? So for example, if you took a $100,000 salary, then you could put in- Yeah, 25%. Do I get 25% because I'm older? No, no, there isn't. It doesn't have anything to do with that. Just like with the 401Ks, you can put in more if you're older. Right, but you can't do that with SEP. Well, I had a SEP at one point through you, long, long, long time ago. You did, and the reason you did is because you also had a 401K at another place, and sometimes that makes sense. But if you're doing, you know, full-time 1099 or majority time, the SEP more than likely isn't the right type of plan for you. I mean, you've got to look at everybody's situation, obviously. So when you don't have that S-corporation election, you have to adjust that contribution for the self-employment tax. That's why I say you only get about 20% if you do not have the S-corporation. If you do not have the S-corporation. So now this is something that's new and exciting with the SEP. It used to be, Sharon, that they were only pre-tax contributions. With the passage of the SECURE Act, now the SEP can be pre-tax or it can be post-tax Roth. So you have a choice. Didn't used to be that way. It actually, you know, it just changed. Here's the downside to the SEP. So if you're an S-corporation, as we've talked about in our S-corporation modules, one of the things you want to do as an S-corporation is you want to lower your tax base by taking a lower salary and not having to pay so much in self-employment tax. With the SEP, in order for you to get the maximum in the $69,000, Sharon, you'd have to pay a salary of $345,000. Well, you wouldn't want to do that. You wouldn't want to do that, right? So $345,000 times 25%, that's where you come up with your 69 or 20%. That's where you come up with your 69,000, okay? Got it. So it does offer flexible contributions. They're pretty easy to set up. And again, these are 2024 contribution limits. But the problem with the SEP is the way we have to contribute to it, okay? The way you have to contribute to it, and there's no catch-up provision for being a little more seasoned as a CRNA, right? Seasoned like that, right? The other thing that you can do is you can have an IRA. And everybody's heard of an individual retirement account out there. If you do not have another retirement plan that you contribute to, then you are eligible to put money in an individual retirement plan. You know, all of us typically make too much money to contribute to an IRA, right? But if you don't have another retirement plan, then you can still contribute no matter how much money you make. Okay, so since Pierce is my employee, I could technically fund an IRA for him through my company. No, because since he's an employee and you have a retirement plan, he's eligible to contribute to your retirement plan. But his retirement plan doesn't have his name on it except as beneficiary. Well, no, he can do a retirement plan as well through your company since he's an employee. With the IRA, you can put seven grand a year away, 8,000 if you're over age 50. With the IRA, remember that is a pre-tax contribution. You would also be eligible to do a Roth IRA as an after-tax contribution because you don't have another retirement plan. And you can invest your IRA anywhere you want to. So it's just another avenue to be able to save for retirement. So if you don't have a SEP or a 401k or another retirement plan you're contributing to, you want the most simplistic thing, you can do this and save seven or $8,000 a year. The solo 401k, and Sharon, this is what you have. And it is designed for self-employed people who have no employees other than a spouse. So if you're working 1099, you can set up your own 401k plan, just like you had at the hospital or another group that you work for. You do it, it's yours for your little company. And you do not have to be incorporated to set up a solo 401k. You can do it as a sole proprietor. You can do it if you just got an LLC with no S election, or you can do it if you got the S election. It allows you, Sharon, the employee, to contribute $23,000, or $30,500 if you're over age 50. And you can choose whether you want your contribution to be pre-tax or you want it to be post-tax Roth. Okay, or you can mix and match it. Then you can do a profit sharing of up to 25% of salary if you're an S corp, or your income if you're not an S corp. If you're an S corp, Sharon, back to my example earlier, we pay you a salary of $100,000. You can stick in because you're a little more seasoned. You could stick in for next year, $30,500 from Sharon. Then Sharon's corporation could do another $25,000. So you could get $55,500 in that plan. That's nice. And oh, by the way, we can do that for Pierce as well. So the thing about the 25% that the company puts in, that is going to be a pre-tax contribution because we're going to deduct that off on the company side on the tax return. Your contribution can be pre-tax or Roth. But let's say you're not an S corp and you put $30,500 in from you. And then you want to contribute from the company. And let's say your company shows $100,000, or let's just use more. Let's say it shows $150,000 in profit. So now we can also put 25% of that 150 or $37,500 plus the 30,500 in there as well. The downside is that you're paying a lot more self-employment tax by doing it that way. So the total maximum between all your contributions, what you put in Sharon as the employee, what the company puts in as the profit sharing cannot be any more if you're under age 50 than $69,000, or if you're over age 50, $76,500. So with the Solar 401k, you can get a lot more money into the plan than you can ASAP. You can get in a lot faster than you can ASAP. You can save more on self-employment taxes than you would with ASAP. So for the majority of our clients and most of the people that we talk to, the Solar 401k just seems to make a lot more sense. And you can also have a loan feature on a Solar 401k, which you cannot with ASAP. So you can borrow up to $50,000 and pay yourself back the interest on that loan if you would like as well, where you can't do that with ASAP. Okay. So in order to max out as an S-corp, the maximum salary would be $184,000 and you would max out as an S-corp. All right, so if somebody has an LLC and they're working on the side, can they still do, even if they have another 401k at work, can they, they can still set up a Solo 401k? They can, but the contribution level, the portion that the employee puts in is no matter which plan you put it in, it is the aggregate. So if you're under age 50, it's 23,000. You could put 12,000 in the W-2 position and you could put 11,000 in your 1099 401k. Okay. So if you're W-2, there's just no way to kind of circumvent it. That's what I was thinking. You would still be able to use your moonlighting money for lack of a better term, but that's not true. You still are subject to these levels of participation. Right. But what you could do is you could also, like you've done, hire your spouse. You know, we can pay them $20,000, $30,000. They can defer in that money and then we can do a profit sharing on top of that. So if we paid them 30, we'd have to gross it up a little bit for self-employment tax, but let's just say we paid them 35, they put in 30,500 and then the company could still do the 25% profit sharing match as well for them. And then you, as your salary, would still get the 25% profit sharing match. So in that scenario, it works out pretty well. So really like the solo 401k plan, again, it's not right for everybody, but you've got to understand, you know, what the parameters are, what works for you, what works in your situation. And I think this kind of is a simplistic breakdown here so everyone can understand it. The other thing that is out there that we see some people use is called a defined benefit pension plan. So if being able to contribute 69,000 or 76,500 isn't enough, and what I mean by that, Sharon, either you're making a whole lot of money and you want to do a whole lot in retirement to save you on taxes and to prepare for your future, or you're really behind the eight ball saving for retirement, you're making a lot of money and you need to catch up very quickly. Well, I bet there's a few people out there doing that. There are just a few, I've talked to several, but the defined benefit allows you to contribute a whole lot more money. And, you know, it really is like the old retirement plans. You know, you work for the same place and you got this pension for the rest of your life. You can set this up like that. That's kind of how it works. You got to have an actuary in the equation. They've got to calculate your contribution in here every year. Oh, by the way, you can have the solo 401k and the defined benefit pension plan. So you can have both of them and they work together so you get even more into your plan. You know, we've got CRNAs doing this that are saving hundreds of thousands of dollars a year. You heard me right. 100, 200, $300,000 a year going into this defined benefit pension. Oh, by the way, Sharon, this is all pre-tax. So think about how much tax they're saving on these contributions going in. So their taxable income comes way, way down. Yes, yes. The other thing that I think people need to know and we don't spend a lot of time on this because this is for a small minority out there, but this plan, if you do it, you need the plan to be able to fund it over five years as a minimum. So the IRS looks very, not very nicely upon people who set these up and have them for two or three years because they had some really good earning years and they just wanted to do this. You really need to do it for a minimum of five. Okay. Okay, before you terminate that. I mean, obviously if it was in place longer, that would be great. They are more costly to administer because you've got to have an actuary, you've got to calculate how much you can put in each year. They typically have to do more filing forms with the government, a 5,500 form. There's just a lot more to it. But if you're at that income level that you really want to sock money away, this is an additional plan out there that will allow you to do that. And it works great, especially if you're that CRNA that doesn't have any other employees, or if you do have other people working for you, they're all 1099, great opportunity to do this. And it can make a lot of sense depending upon your scenario. So when you look at retirement plans out there, and these are formal retirement plans, these are really the big ones that we see people use. There's a few other ones out there that are a little smaller, but these are the big ones that I think the majority of CRNAs would benefit from.

retirement plans

1099 CRNAs

SEP plans

IRAs

solo 401(k)s