Maximizing Your Business Retirement Savings: What You Need to Know
You Can Still Contribute Before Filing Your Taxes
Disclaimer: I am not a financial advisor, but I can recommend one if you need personalized guidance. My role is to help businesses stay financially organized and ensure they have the right tools and strategies in place.
As a business owner, you’re focused on growing your company, managing expenses, and optimizing your tax strategy. However, one crucial area that often gets overlooked is retirement planning—and the good news is that you may still have time to make contributions until you file your taxes.
I recently came across an insightful article on maximizing retirement savings for high earners, which includes strategies such as the Backdoor Roth IRA and the Mega Backdoor Roth IRA. If you're looking for ways to make the most of your retirement contributions, this is a must-read.
Hartford Funds: How High Earners Can Maximize Their Retirement Savings
Understanding Contribution Limits
Before diving into advanced strategies, it’s important to know the maximum contribution limits for various retirement plans. If you haven’t yet maxed out your 2024 contributions, you may still have time to do so before filing your tax return (depending on the type of account).
The "Backdoor Roth" Strategy
For business owners and high earners who exceed the income limits for a Roth IRA, a Backdoor Roth IRA can be a great way to contribute.
How it works:
Contribute to a Traditional IRA (after-tax).
Convert the funds to a Roth IRA (this is a taxable event).
Enjoy tax-free growth and withdrawals in retirement.
This strategy is especially useful for those whose income exceeds the Roth IRA eligibility thresholds (e.g., over $246,000 for married filing jointly in 2025).
The "Mega Backdoor Roth" Strategy
If your 401(k) plan allows after-tax contributions and in-service rollovers, you may be able to use the Mega Backdoor Roth IRA strategy to contribute even more.
For example, if you’ve maxed out your 401(k) contributions, you may still be able to contribute additional after-tax dollars and roll them into a Roth IRA—allowing for more tax-free growth.
Example for 2025 (Ages 50+):
401(k) Contribution (Pre-Tax or Roth): $31,000
Employer Matching Contribution: $15,500
Total So Far: $46,500
Allowed Additional After-Tax Contribution: $31,000
New Total (After Mega Backdoor Roth): $77,500
More than 70% of 401(k) plans allow in-service withdrawals, so check with your advisor to see if this option is available.
Why This Matters for Business Owners
Many business owners focus on immediate tax deductions and short-term financial decisions, but retirement planning is just as critical. Maximizing contributions, leveraging backdoor strategies, and working with a financial advisor can ensure that you’re building long-term wealth while reducing taxable income.
There’s Still Time to Contribute for 2024!
✅ SEP IRAs and Traditional IRAs: You can still contribute for 2024 until April 15, 2025 (or October 15 if you file an extension).
✅ Solo 401(k) Plans: If set up before December 31, 2024, contributions for 2024 can still be made before filing your taxes in 2025.
✅ HSA Contributions: Contributions for 2024 can still be made until April 15, 2025, if you were HSA-eligible in 2024.
📌 If you have questions about bookkeeping, tracking contributions, or organizing your finances for tax season, I’d be happy to help. And if you need guidance from a financial expert, I can also recommend a trusted financial advisor.
