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Author Topic: 16 year old business owner  (Read 3698 times)

HSH Princess Grace

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16 year old business owner
« on: October 07, 2019, 10:11:59 AM »
My son is an IC to a small business (not ours).  He puts the max in his Roth. Can he open a 401k or Sep IRA to remove the balance of his income from the college financial aid considerations and shelter all/most from taxes? 
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Chrissy

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Re: 16 year old business owner
« Reply #1 on: October 20, 2019, 02:24:56 PM »
He should be able to do a Solo 401k or a SEP.  Solo 401k probably allows him to contribute more:  $18k + 25% of salary = $53k max.  SEP is whichever is less:  25% or $56k.

Yes, this allows him to shelter some from taxes, but it looks like his contribution to the retirement plan in the year he files the FAFSA would count as untaxed income.  This stuff is confusing, so do your own research.
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