You have a full-time job that covers your health care and your 401(k). You also get to earn side-income without dealing with the “Self-Employment tax.” Congratulations – you’re earning more and may have a backup plan if you leave your company.
Still, all that side-income is being taxed. At your company, you at least have a 401(k). However, that’s not stopping you from setting up another retirement fund for your side-income.
Even if you have a 401(k) at your company, you can have a separate 401(k) just for your side income. And better yet, you have more control, to invest in a wider range of funds, and avoid the unnecessary fees in your company’s 401(k).
Even better – if you make enough money full-time, you can save a lot more than the standard $19,000 + some matching you get at your full-time job. With an individual 401(k), the first $56,000 you earn ($62,000 if over 50) can all be saved into your 401(k).
In fact, if you’re married, your business may be able to save you $110,000-122,000 for retirement between the two of you.