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Dennis Markway (left), president and founder of Iron Horse Wealth Management, and Greg Hayes, the company's director of financial planning.

Retirement Savings Plans Abound for Business Owners

You’re a partner in a thriving medical practice. Or maybe you own a successful construction business. You’re very busy, very well paid and maybe not thinking much about a retirement savings account in the belief that it wouldn’t allow you to accumulate much money.

You may be wrong. True, a workplace 401(k) plan will let you set aside no more than $18,500 a year ($24,500 if over age 50). But what about a profit- sharing plan, which can work very well with a medical practice? There, the tax-deferred set-aside can top out at $60,000. Add that up over 25 years and you can accumulate some serious money.

Dennis Markway, founder and president of Johnston-based Iron Horse Wealth Management LLC, said business operators sometimes focus on building up what they can see around them now and set aside thoughts of retirement planning.

“Lots of owners don’t take time to wade through the variety of options available to them,” Markway said. And they may not realize that the retirement savings industry has become sophisticated in advising what kinds of plans they can establish that will produce long-term benefits to both their employees and themselves.

There is a long list of choices. Yes, there is the 401(k). A much richer variation is a Solo 401(k), which works for sole proprietors and independent contractors such as consultants. The 2018 contribution maxes out at $55,000, or $61,000 if you’re over 50.

In addition, there are SEP IRAs, which the employer funds, and SIMPLE IRAs, which the employee funds with a matching add-on by the employer. The SEP IRA has a relatively rich contribution limit of $55,000 for 2018.
The SEP-IRA approaches the richness of the profit-sharing plan, which likewise is employer-funded. These higher-limit plans are good retirement savings catch-ups for medical professionals, said Markway, since doctors and dentists may have great incomes but great college bills to pay down first. The same could hold true for lawyers.

For people who are throwing off a lot of cash once their careers are on a more solid footing, Markway said cash balance plans are a good choice. These are employer-paid, defined benefit plans, and the maximum annual benefit for a participant with at least 10 years of participation and a normal retirement age between 62 and 65 increased in 2018 to $220,000.

And if you want to get creative you can mix and match some of these plans. A Roth 401(k) plan can run at the same time as a 401(k). A SEP IRA and Solo 401(k) can exist side by side; ditto for a solo 401(k) and regular 401(k).

The list goes on. Whatever option you choose, just remember that if you’re a business owner, the benefits and tax advantages are too great to ignore.
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Legacy Bridge

New Tax Law Could Influence Car-Buying Decisions

The new tax bill has some good news and some so-so news for car buyers, depending on how you buy the car.

For starters, the law limits to $10,000 the combined amount from state property and sales tax payments that can be claimed as deductions if you itemize your return. A big-ticket item such as a 2018 model S550 4Matic Sedan Mercedes Benz currently on show at Mercedes Benz of Des Moines will generate a $6,748 sales tax bill if you pay the list price of $112,480. That leaves only $3,252 for your property tax bill.

If you're buying a car for your business and qualify for a bonus depreciation, this tax bill works in your favor. That tax code meant for equipment purchases (including autos) had allowed a 50 percent write-off in the first year and was due to phase out in three years. Now, it's a 100 percent write-off and goes through 2022. The tax bill also now covers used equipment, as well as new.

For a business purchase of a luxury auto that does not claim the bonus depreciation, there is a boost in the allowable depreciation.
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801 Chophouse

Guest Opinion: Women, Wealth and Philanthropy

What type of power do women have when investing? Ninety-five percent of women are financial decision makers, and 84 percent of married women are either solely or jointly responsible for household financial decisions, so the opportunity and power to influence is tremendous. Women now control more than half of U.S. personal wealth, and some estimate that by 2030, women will control as much as two-thirds of the nation’s wealth. Furthermore, nearly half of women are the primary breadwinners in their households. This is an incredible responsibility and opportunity to influence your personal situation and causes you care about. Read more
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These Five Questions Can Diagnose Your Financial Wellness

Money matters. It impacts our stress levels, our relationships, our ability to give back. It’s why so many people started out 2018 convinced this would be the year they finally master their finances. > FULL ARTICLE

Looking for your next destination to find unique home furnishings?

Edina, Minnesota, is home to a haven of upscale furniture and accessory brands that are hard to find. > FULL ARTICLE

dsmWealth's Picks on What You Need to Know

  • Ten years ago, the global financial crisis hit, and many wealthy families began to rethink their uses of traditional investment managers and firms. They wanted more active control. Hence a global interest in creating family offices. Here’s a quick rundown of what’s been going on in the family office space worldwide from

  • For high-net-worth investors in commercial real estate, the federal tax overhaul is practically a financial home run, National Real Estate Investor reported, with legal and tax experts saying the law bestows several benefits that make it more appealing for them to buy properties.

  • What’s ahead for the Iowa economy? The Business Record asked a panel of experts at its annual Economic Forecast Luncheon on Jan. 25 to tell us whether the Iowa economy will improve or regress in 2018. Watch the video to hear the responses from each of the panelists: Debi Durham, director, Iowa Economic Development Authority; Cameron Hinds, regional chief investment officer, Wells Fargo Private Bank; Beth Townsend, director, Iowa Workforce Development; Jeff Robinson, senior fiscal legislative analyst, Legislative Services Agency; and Dave Nelson, chairman and CEO, West Bank.


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