Retirement Legacy Planning
Browse our collection of articles on retirement legacy planning from AE Tax Advisors.
Our team regularly publishes insights on retirement legacy planning to help high-income professionals stay informed about tax planning opportunities and compliance requirements.
Frequently Asked Questions
When must a retirement plan be established?
Under the SECURE Act, most employer plans can be adopted as late as the due date of the employer's return including extensions for the first plan year, so a plan set up after year end can still produce a deduction for that year. Employee salary deferrals cannot be made retroactively.
How much can a business owner contribute to a retirement plan?
A solo 401(k) permits employee deferrals plus employer contributions up to the annual additions limit, roughly $72,000 for 2026 plus catch-up. Adding a cash balance defined benefit plan can raise the total well beyond $250,000 for an owner in their fifties, because the contribution is actuarially derived from the benefit promised at retirement.
Do I have to cover my employees?
Yes. Coverage and nondiscrimination rules apply, so a plan cannot cover only the owner. Cross-testing on a benefits basis allows the owner a much larger credit than staff, and typical staff cost runs 5% to 12% of covered payroll.
What is a backdoor Roth contribution?
A nondeductible traditional IRA contribution followed by a conversion to a Roth IRA, used by taxpayers above the Roth income limits. The pro-rata rule of Section 408(d)(2) aggregates all traditional IRA balances in computing the taxable portion, which is what makes the strategy work cleanly only when other pre-tax IRA balances are absent.