Why Self-Employed & 1099 Veterinarians Should
Consider a Solo 401(k)

Being a self-employed or veterinarian with 1099 income (even if you also have a W2 job!) can
be very rewarding. You get to choose where and how much you work, amongst other benefits.
But it also means you have to plan for your own future. One of the best ways to do that is by
setting up a Solo 401(k) retirement plan.

Why Choose a Solo 401(k)?
A Solo 401(k) is a powerful retirement plan designed just for self-employed individuals with no
employees (except a spouse). It allows you to:
     *Save for retirement in a tax-advantaged way
     *Lower your taxable income
     *Grow your money over time with tax-deferred or tax-free growth (Roth option)
     *Potentially save more than a Traditional 401(k)

How Much Can You Save?
One of the biggest benefits of a Solo 401(k) is how much you can contribute. You can contribute
in two ways:
1. As the employee – You can contribute up to $23,000 (or $30,500 if you're 50 or older)
in 2024.
2. As the employer – You can contribute up to 25% of your net earnings from self-
employment, up to a total limit of $69,000 (or $76,500 if you're 50 or older) in 2024.
These can come in the form of employer profit sharing and/or after-tax contributions
(also referred to as the Mega Backdoor Roth IRA).

Tax Benefits
A Solo 401(k) helps reduce your tax bill now while saving for the future. You can choose:
     *Traditional Solo 401(k): Contributions lower your taxable income now, and you pay
taxes when you withdraw the money in retirement.
     *Roth Solo 401(k): You pay taxes now, but withdrawals in retirement are tax-free.
     *After-Tax 401(k) contributions: Combined with an in-plan Roth conversion feature, you
can supercharge your after-tax savings!

Tax Credits for Starting a Solo 401(k)
If you are opening a Solo 401(k) for the first time, you may qualify for tax credits to help cover
startup costs. Here are the key tax credits available:
1. Startup Cost Tax Credit – You may receive up to $5,000 per year for the first three
years to help offset administrative and setup costs. This credit applies to businesses
with fewer than 100 employees and covers 50% of the plan’s startup costs, up to the
maximum limit.
2. Automatic Enrollment Credit – If you include automatic enrollment in your Solo 401(k)
plan, you may qualify for an additional $500 per year for three years as an extra
incentive to encourage retirement savings.
3. Employer Contribution Credit – For businesses with 50 or fewer employees, an
additional tax credit may be available for employer contributions, covering up to 100% of
contributions made on behalf of employees (including the owner) for the first two
years, subject to limits.

Get Started Today
Setting up a Solo 401(k) is a smart move for self-employed veterinarians and those with 1099
income. It helps you take care of your future while lowering your taxes now. A financial planner
can help you set up the right plan for your needs so you can start saving today!

Andrew Langdon, CFP®, CSLP®, EA, MBA
Financial Planner & Founder
VetWorth Financial