Author Topic: Folks with experience with SEP and/or Defined Benefits Plan?  (Read 1115 times)

boston swiss

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Folks with experience with SEP and/or Defined Benefits Plan?
« on: March 24, 2016, 02:33:16 AM »
Hi Fellow Mustachians, 

I wanted to know where I could get more info about SEP and Defined Benefit Plans?  I make a very healthy living on a W2 salart while living and working in Switzerland.  The downside is, no contributions to a US 401k while working in Switzerland per my employer plan.  However, the money I make in the US is purely from my two rental units, which before expenses provides about $74,400 USD per year.   As we don't need the income for ordinary living expenses from the US rentals, after a conversation with a tax preparer I was thinking of forming an LLC and creating a SEP and/or Defined Benefits Plan from our real estate business.  The intent would be to take the income from the rentals and put into a SEP or Defined Benefits Plan.

Thanks for any info you can provide!  If you are already using an advisor to set these up for those who are self-employed Mustachians, please tell me how it is working out for you?

Thanks!

capitalninja

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Re: Folks with experience with SEP and/or Defined Benefits Plan?
« Reply #1 on: March 25, 2016, 03:44:19 PM »
I've had SEPs for several years now and absolutely love them. You'll be able to put in anywhere from 20 - 25% of your net income up to a maximum of 53k between your 401k and SEP. Check with your CPA for the net income contribution percentage you should go with.

If your real estate business expenses are low you can end up putting away a nice bit of change. It's also an above the line deduction so it directly reduces taxable income which is always nice.

I have multiple SEPs (at different brokerage houses) so that I can buy their ETFs commission free. They're free to setup, so as long as you keep track of the total amount you contribute, there's no issue.

Outside of your 401k it's one of the few investment vehicles that allow for tax advantaged investing regardless of income. I highly recommend that you set one up if you have the disposable income to contribute to it. Every little bit helps. :-)

Telecaster

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Re: Folks with experience with SEP and/or Defined Benefits Plan?
« Reply #2 on: March 26, 2016, 12:13:04 PM »
Also consider a self-employed 401(k).   Typically higher contribution limits than a SEP IRA.