The maximum retirement contribution is 53k. But employees can only contribute 18k a year, and employers are not generous enough to match 35k a year.
If your rentals have 35k or more net profit, you can open a solo-401k and put 35k rental profit into it pre-tax, right? If that’s the case, we should just do a pre-tax solo-401k instead of Backdoor IRA, right?
Saving tax today is a no brainer.
First, rental income is investment income that can not be used for retirement contribution. If you earn as income, you can go max.
You need to talk to CPA/IRS related lawyer how to make Rental income as earnings. If you have corp and you physically work, you can write a check for your work with W2 or 1099 that can qualify as income.
If you manage your rental property yourself, can it be treated as earned income? You work for it
You need to issue 1099 or W2 for it. IRS may question you. You need to talk to CPA or tax related lawyer.
oh, maybe it’s not worth it. Mega Backdoor is the way to go. Pay tax now and no tax forever.
How about a full time landlord? If you quit your job and manage your rentals full time, seems that you still can’t set up a solo-401k.
So much suffering for something that you can do without any further ado. If you have family to worry about, open an IUL.
It has living benefits, which are good when it comes to long term care if you get sick and nobody to take care of you or you definitely will end up in a wheelchair and your real estate goes to hell because you are so sick.
You can retire with $100Ks a month 20-30 years later depending on the excess premiums which will be based on age, and health ratings. Insurance companies use ETFs to invest the premiums of their insured people, and never risk your money. You get 0% on any market crash, instead of losing whatever $% the market lost any given day or event.
No picking up rent, no calls in the middle of the night, only one call a day after they transfer your premium from your bank account to the insurance company. From there you can loan and never pay back the 75%-80% of your premiums. The Death benefit will pay the loans at the end of the road. You will have 75-80% earning 7% or 16% as lately. compounding interests, and you will have that 75-80% in your hands to pay a mortgage or any other type of investment you pursue.
IULs beats any other opportunities around when it comes to liquidity, as I sad 75%-80% of your premiums are there for you, no penalties for not paying back any loan, there’s no payments, why? It’s your money, why let the management company keep yours? All tax free.
No need to pay an excess premium if you like, only the cost of insurance, but you may not get the results explained above.
See if you can pay yourself a salary. Definitely track your hours. Also, I thought there were rules on the 401K contribution where certain contributions required you pay yourself non-401K salary. That might be to contribute over the $53K limit though. I need to figure this stuff out myself.
Also, there’s a real philosophical question about the “pay no tax forever.” Do you really trust the government not to change the rules on you? Then again, if you were going to invest it anyways, does it matter?
The main reason trusting Roth is that it is taxed today before moving to Roth. The appreciation is going tax free.
Government may change the rules, but it affects the accounts/contribution after the law is effected.
If they change the rule now, it affects anyone/account/money from tomorrow, but not the savings until yesterday.
With this idea, we can be confident of savings/tax savings today.
This is Trust.
Roth IRA money by definition is a non-qualified money, it paid taxes already but it can be at risk if they modify the distribution since is not protected by the 7702 in the IRC. I heard there were plans to do so, but that would be double taxation.
Market risks: It runs the same risks as any mutual fund, 401K or any investment in the stock market that is not based on an index, or if it’s not based on 7702. The market drops, so is your principal. Everybody is happy now, but when 2008-9 crash happens again (if), lots of tears and suicides and divorces and BKs come our way.
It has limitations on how much you can put down as premium.
You can’t loan 80% of your money, and if they allow any amount, you have to pay it back sooner or later. Same as 401Ks, there’s no liquidity, you can’t leverage your own money, it’s on the hands of the company managing your $.
It doesn’t give you any protection if you get sick, or die. Your beneficiaries will get to pick up whatever you left, that’s all.
Still, compared to 401K, Roth IRA is better, except the limitations on the contributions.
Jil is not using the right definition. What he is referring to is what’s called “grandfathering”. Meaning that the new rules can’t go retroactively but forward.
Trusts? They are unique, except for living trusts, they are kind of impenetrable by foreign eyes to the deal.
We at our financial group are working with a guy who knows about trusts, the ones you will never see around. When I say never seen, is because they are never seen. You don’t even need a lawyer to create them. 
You did not even understand what Terri said “Trust”. She meant “Faith” in government ? 
Do you know 401k has three different ways, Traditional, Roth and After tax?
If you say, Roth IRA is better, you indirectly acknowledge Roth 401k better which means part of 401k is better.
Retirement money is yours, free to take after 59.5, with appropriate tax payment (if any). Why do you need a loan on your own money?
It does not make sense to keep 100k in checking and get a loan on it.
Why do you need a loan on your own money? 401K people borrow money from their accounts to buy homes, and so forth, right? Is that something new? If they can, can they loan 80% of their premiums, and never, ever pay them back? They can’t, right? If they do, that money taken out is not earning any interests. If you know they can loan that much, and still earn interests, please let me know.
What do you mean "if any?"** The only income you won’t pay any taxes on is the income generated by life insurance, add Roth but again, risks and whatnot, too much to debate. Any landlord here is bound to pay lots of taxes even when retired. Unless they give all their networth to their kids. Of course, they won’t if they are lying about having bunches or rentals. 
Monthly Premium: $4,000
Cost of insurance: $1,000
Loan to never be paid back, death benefit will pay at the end: $3,000
Premiums earning 7%-16% = $3,000
You basically get to pay a premium of $4,000 but get $6,000 to work for you.
You have $3K in your policy earning 7% + compound interests against simple interests.
You loan $3K earning what % if you pay a rental unit with it?
How much do you get in return on a rental unit if you pay a mortgage of $3K a month? Another $3K? OK, let’s leave it at $1500 a month. Isn’t that enough to pay the 6% ($180) simple interest on $3K?
Plus, we need to focus on how much equity you are earning from using the $3K. Add it to the rental income, is it enough to pay the $180 simple interest on the $3K loan?
And some people, not smart people in my opinion are crying for 6% simple interest against 7% compound interests on $3K? Really? <-------
You also get living benefits, critical, final, chronic, you get sick and can’t work anymore, the equivalent to long term care kicks in for 50 months.
Math is clearly really hard for some people and not their strength. Wow.
I know, I’ve tried to explain math to some people, but they seem to be so uneducated I lost hope.
Same as those who can’t run a spread sheet with given quantities.
Or, the power of compounding interests against simple interests.
That is from people who have Phds