SO, after a number of years earning $50-100K as a self-employed product designer (mostly royalties), I was able to get a client to buy me out of a license earlier this year which, combined with some other odds and ends has me looking at a YTD profit of $500K *after* my salary and benefits. My question is: how do I spread this out to reduce the tax exposure?
I don't need the cash right now and my accountant suggested looking into funding a Cash Balance Plan. From what I understand is that would be a pension that I fund in TY2021 as a business expense and draw down / benefit from over time.
Does anyone have any thoughts on this approach or other clever ideas?
- 43 y/o
- Married filed jointly (wife ~$60K this year)
- Living in Colorado
- No kids/dependents or plans for either
- Expenses under control, good to retire in 1-2 years
- Debt includes low APR mortgage and very low APR auto loan
- Cash is in hand, too late for structured sale
- Don't really want to buy a ton of (whatever) to expense as COGS and sell later
- Bought PHEV in March ($7.5K fed + 2.5K state tax credit) and about to sign on solar ($5K or so credit) but open to other tax-beneficial home efficiency improvements
- Don't need new business vehicle, could be a wash and not worth the hassle if I sold our 2018 in current used car market
Not looking to get too crazy/exotic/sketchy, but basically received my next 4-6yrs income all at once and would like to spread it out a bit as I head into retirement. Would love to hear your thoughts! Thanks all :)