The i401K: Your Best Friend as An Independent Contractor

The i401k (also known as the Individual 401K, one participant 401k, or Solo 401K) is the 401K plan for Independent Contractors or sole proprietors. Just as a traditional 401K offers myriad benefits for employees like tax deferred retirement savings and the benefit of lowering your tax bill, the i401K plan was set up to offer the same benefits for independent contractors and individual business owners. The IRS defines it here

Tax Savings for Independent Contractors

Since I’ve worked as an independent contractor for several years, the i401K allows me to contribute in two ways:

  • as an employee, making salary-deferred contributions of up to $19,000 in 2019
  • as an employer (because I own a sole proprietorship), making profit-sharing contributions of up to $56,000 (including the $19,000 salary deferral) a year, tax free, for retirement. There are a couple of caveats to this, so read on for more details! Continue reading “The i401K: Your Best Friend as An Independent Contractor”

Building Wealth for Freedom

I’ve written a lot about getting out of debt. That was the first step for Mr. ThreeYear and me on our journey to financial and location independence.

Or maybe it wasn’t.

Fishing on the beach building wealth freedom www.thethreeyearexperiment.com

When I was in college, my dad started reading a lot about stocks. I was curious, and began reading a bit myself about investing.

I knew nothing about the saving side of the equation, but investing extra money had me curious. I opened my first Ameritrade investing account when I was a senior in college. I invested the money I received as a graduation gift into this account, in some stocks that my parents and grandparents recommended (Coca-Cola, MedImmune, and some others I can’t remember). I picked up the occasional book on investing, such as The Only Investment Guide You’ll Ever Need, and The Little Book that Beat the Market.  I left my money to grow and forgot about it. Continue reading “Building Wealth for Freedom”