In this article, we will explore practical strategies and essential steps to prepare for the financial challenges of divorce in Belfast, empowering individuals to make informed decisions and secure their financial well-being during this transformative journey.

Source: https://www.pexels.com/photo/handwritten-writing-business-money-7841838/

How Does Divorce Impact Finances?

There are a number of ways in which a person’s financial situation may be impacted by a divorce. These include:

• Living expenses – for instance, finding new accommodation and sole responsibility for paying bills
• Childcare costs
• Child maintenance payments
• Lost assets such as investments, pensions and even businesses
• Reduced income in circumstances where one spouse needs to reduce their working hours due to childcare responsibilities

When a person has been accustomed to a lifestyle involving two incomes and the sharing of bills and expenses, a divorce can mean some major life changes.

Source: https://www.pexels.com/photo/a-bandage-on-a-ripped-fifty-dollar-bill-5909817/

How to Prepare for the Financial Challenges of Divorce

If you find yourself facing the possibility of a divorce, it’s crucial to take charge of your finances and prepare thoroughly. In this section, we’ll discuss effective ways to minimise the financial impact of your divorce, ensuring you have your affairs in order and setting yourself up for a smoother transition during this challenging time.

Assessing the Situation

The first thing you need to do is to put together a realistic overview of your finances and this should include:

• Shared assets such as a residential property
• Cash in shared and individual bank accounts
• Pensions
• Property such as cars and other valuables
• Debts including credit card balances and loans
• Personal income such as a salary following your divorce

If you have a prenuptial agreement, then the division of assets should be somewhat straightforward. However, if not you may want to consider hiring the services of a financial advisor to help you with this.

Putting this information together in a coherent way will help to give you a picture of what your finances will look like following your divorce and will help you to plan your future. During this stage, it’s extremely important to be honest about any and all assets.

Dividing Assets

During a divorce, the division of assets can become acrimonious and it’s therefore essential that you secure the services of a good divorce solicitor to ensure that you walk away from the divorce with everything that you are entitled to. Make sure that you gather all the necessary documentation, for example evidence of mortgage and bill payments which you have covered during the relationship.

Credit

When embarking on a new single life, you’ll need to ensure that you have a healthy credit score in order to be able to secure financial products such as a mortgage. A divorce can sometimes impact on the credit score of one or both parties and so it’s important that you monitor this regularly to allow you to quickly identify any changes. This can be done easily through one of many online platforms which are usually free to use.

Establishing your Independence

If you and your spouse have a shared bank account, you’ll want to close this and open your own individual account as soon as possible in order to establish your own financial identity. Be sure to amend any transactions such as your salary payments in order to redirect them to your personal account.

Source: https://www.pexels.com/photo/cutout-paper-of-man-examining-bills-through-magnifying-glass-5849566/

Put Together a Budget

In many cases, a divorce will mean that you will now have sole responsibility for previously shared outgoings such as mortgage, bills, transport and childcare which can mean a significant change in lifestyle. Because of this, you’ll need to recalibrate by putting together a post-divorce budget. It’s important to be realistic when doing this in terms of balancing your predicted income and outgoings. In some cases, this will mean trying to reduce expenses by cutting down on some unnecessary spending.

Preparing for the Cost of Divorce

Embarking on a divorce can be overwhelming – not least when it means major changes to your finances and to your lifestyle. Getting your affairs in order as soon as possible, as highlighted in this article, can help you understand your new situation and to plan for your financial future as proactively as possible.

Please be advised that this article is for general informational purposes only, and should not be used as a substitute for advice from a trained financial professional. Be sure to consult a financial advisor if you’re seeking advice on your finances. We are not liable for risks or issues associated with using or acting upon the information on this site.

The post How to Prepare for the Financial Challenges of Divorce first appeared on Economic Journal.

But did you know that boiler finance can also be a great investment? In this blog post, we’ll explore why.

What is boiler finance?

Boiler finance is a way for people to buy a new boiler for their home without having to pay for it all at once. Instead, they can spread the cost over time by making smaller monthly payments. This is similar to how you might pay for a phone or a subscription.

By using boiler finance, homeowners can upgrade to a newer, more efficient boiler that can help them save money on their energy bills, reduce their carbon footprint, and avoid costly repairs.

It’s a way to make an important investment in your home without having to worry about a big upfront cost.

Boiler Finance Advantages:

If you’re looking for a great financing option for your new boiler, Boiler Central might be the best choice for you. They offer competitive financing packages that can help make your investment in a new boiler more affordable and manageable.

Save money on energy bills

One of the primary benefits of investing in a new boiler is that it can save you a lot of money on your energy bills. Modern boilers are far more energy-efficient than older models, which means they use less energy to heat your home and water. By upgrading to a new, efficient boiler, you could potentially save hundreds of dollars each year on your energy bills.

Increase your home’s value

Investing in a new boiler can also increase the value of your home. When it comes time to sell your property, potential buyers will be impressed by the energy efficiency of your boiler and the fact that they won’t need to replace it anytime soon. This can help you to secure a higher asking price and make your home more attractive to buyers.

Reduce your carbon footprint

In addition to saving you money and increasing your home’s value, investing in a new boiler can also help you to reduce your carbon footprint. Modern boilers are much more environmentally friendly than older models, as they produce fewer emissions and use less fuel. By upgrading your boiler, you’ll be doing your part to protect the planet and reduce your impact on the environment.

Avoid costly repairs

Old boilers can be prone to breakdowns and require costly repairs. By investing in a new boiler, you can avoid the inconvenience and expense of unexpected repairs. Many boiler finance packages also include maintenance and repair services, which can give you peace of mind and save you money in the long run.

Take advantage of flexible payment options

Boiler finance packages offer flexible payment options that can make investing in a new boiler more affordable. Many packages allow you to spread the cost of your new boiler over several years, making it easier to manage your finances and avoid a large upfront expense.

Conclusion:

In conclusion, boiler finance can be a great investment for homeowners who want to save money on their energy bills, increase their home’s value, reduce their carbon footprint, avoid costly repairs, and take advantage of flexible payment options. If you’re considering upgrading your boiler, be sure to explore the financing options available to you and choose a package that meets your needs and budget.

The post Why Boiler Finance is a Smart Investment for Homeowners first appeared on Economic Journal.

The Rise of Digital Banking and Payment Processing

Digital banking and payment processing have been two of the most significant areas of growth in the fintech industry. Companies like Monzo, Revolut, and N26 are leading the charge, providing innovative and user-friendly digital banking solutions that enable customers to manage their finances entirely through a mobile app.

These digital banks are also leveraging cutting-edge payment processing technology to provide a more seamless and integrated payment experience. By integrating with payment gateways and using open banking APIs, these companies are able to provide real-time transaction monitoring, customizable payment flows, and integration with a range of payment methods and currencies.

The Future of Investment Management

Investment management is another area where fintech companies are making a big impact. Companies like Wealthfront and Betterment are using sophisticated algorithms and machine learning technology to provide personalized investment advice and automated portfolio management.

In addition, blockchain technology is being increasingly used to facilitate investment in alternative assets, such as real estate and private equity. This technology enables fractional ownership and allows investors to access new and previously inaccessible markets.

The Impact of Insurtech

Insurtech is another area where fintech companies are transforming the financial market. These companies are using technology to streamline the insurance buying process, offer more personalized policies, and provide better claims handling.

One example of a successful insurtech company is Lemonade, which uses artificial intelligence to underwrite policies and provide fast, transparent claims handling. Another example is Trov, which offers on-demand insurance for personal belongings and experiences, using technology to enable customers to turn insurance on and off as needed.

Payment Gateway, Payment Links, and Subscription Payments

Exactly.com is one of the fintech companies leading the charge in providing innovative and user-friendly payment processing solutions. Their platform offers a range of features, including a payment gateway, payment links, and subscription payments.

Exactly.com’s payment gateway enables businesses to securely accept payments online, with real-time transaction monitoring and advanced fraud prevention measures. Their payment links feature allows businesses to generate custom links that can be shared with customers, making it easy for them to make payments without the need for a full checkout process.

Subscription payments are another area where Exactly.com is making waves. Their platform enables businesses to easily set up and manage recurring payments, with customizable payment schedules and the ability to offer trial periods and discounts.

The Importance of Cybersecurity

As fintech companies continue to innovate and disrupt traditional models, the importance of cybersecurity has never been greater. Fintech companies are increasingly being targeted by cybercriminals, who are seeking to exploit vulnerabilities in their systems and steal sensitive customer data. To address these challenges, robust fintech marketing strategies are now emphasizing the critical role of advanced cybersecurity features in gaining customer trust and loyalty.

To combat this threat, fintech companies are investing heavily in cybersecurity measures, such as encryption, multi-factor authentication, and threat monitoring. They are also working closely with regulators to ensure compliance with data protection regulations and to stay up-to-date with emerging threats.

Conclusion

Overall, the fintech industry is continuing to drive innovation and disruption in the financial market in 2023. By leveraging cutting-edge technology, embracing new payment methods and currencies, and providing personalized solutions, fintech companies are transforming the financial market and providing customers with a more seamless and integrated experience. As the industry continues to grow and evolve, we can expect to see even more exciting developments in the years to come.

The post The Future of Fintech: How Fintech Companies are Moving the Financial Market Forward in 2023 first appeared on Economic Journal.

Well, there are interesting things they do that people in the low-income bracket don’t and won’t. Whether born into money or amassed millions by working their way to the top, wealthy people know a lot about how not to blow through their earnings.

Since the cost of living can be expensive, especially if you are doing a high life, a lack of an effective financial approach can take your millions down the drain without trying hard to.

Here is a quick rundown on how the rich stay rich.

• They seek professional financial advice. Not everyone is skilled in financial literacy. Plus, it could take a lifetime of learning to understand the complicated money matters, from earning to spending, investing, protecting, and borrowing. People who are rich understand and acknowledge their incapacities in the area, so they employ a financial expert as their anchor. And they find it better to work with a local company. If they live in the southwest, they would rather trust a financial advisor Bristol than a flashy firm at the other end of England.
• They invest money in property, art, cars, and unusual securities. They are not afraid of tying up their money for five years at the very least to enjoy high yields and big returns.
• They put a portion of their wealth into retirement savings no matter how far the future might seem. They prioritise savings rather than continuously improving their current financial status so they can maintain their current lifestyle even in their golden years.
• They have several income sources. The rich do not put all their eggs in one basket, so to speak. They do not live paycheck-to-paycheck and continuously work out ways to depend on not just one source of income. It’s one way of protecting themselves and preserving their emergency savings when bad things happen. Believe it or not, bad things happen to rich people, too. But the impact is not that strong; it doesn’t strain them financially because they always have a saving grace, a security blanket that delivers when one of their income sources fails to.
• They do not remain debt-free. But they do not borrow money that weighs down their finances either. Instead, they leverage debt to their advantage. A mortgage, for example, gives them a great chance to expand their wealth with a small down payment. Since property investment usually grows in value, it pays off the debt efficiently and even puts back a lot in return.

It’s easy enough to remember that the rich do not necessarily sleep on their money to keep it. You can see them working hard, making the right decisions, and constantly finding ways to grow their future with wise investments.

They know that making millions is one thing, but keeping the fortune and growing it requires a different set of tasks altogether.

The post How Do the Rich Stay Rich in the UK? first appeared on Economic Journal.

But don’t start thinking it’s easy to get a job as a financier. Financial workers ought to be dynamic because they are working in a complex market with ups and downs everyday. Financial institutions need the best people for the job. You may have the qualifications, but also need to showcase your skills through a finance resume. A well-written and structured resume shows that you’re a rare commodity and the company would be blessed to have you onboard.

You need a financier resume that would make Warren Buffett proud! Perhaps you need to skim through a classic finance resume example before getting started, but there is always the option of hiring someone to craft the perfect resume for you.

Nonetheless, we’re here to share the 5 tips to create a job-winning financier resume. It will help you kick-start things. Let’s get started!

Unraveling the 6 Tips to Create a Compelling Financier Resume

#1 Use a Proper Format For The Resume

Let’s get real: the hiring manager wants to see a structured resume. Make sure you check that the contact information is updated. Put your social media (LinkedIn) account and make sure the link is working.

Share your professional experience, but make sure it has dates of joining and leaving date. Ideally, financiers should opt for a chronological layout. It will showcase your financial skills and job experience in this specific field. That’s what the hiring manager wants to see!

Choosing the right kind of font is also needed. Make sure it’s easy to read and don’t go for italics. A financier resume needs to be very specific. All the hiring manager needs to see is your professional skills and experience.

#2 Write the Objective at the Beginning

Giving an introduction is crucial. The summary or career objective needs to be crisp and precise. It’s a very short paragraph that begins the finance resume and helps your hiring manager to understand that you are a unique candidate. Don’t forget to mention your experience, financial skills, and career accomplishments. Pick three to four good points and add them to the summary section.

#3 Make the Experience Section Crisp

Do you want the job of your dreams? As a financier, you would want to highlight the experience section with crisp details. Start from the current position and then go down the memory lane. Each of the job entries should be clear and precise. Write the title of the job, company name, employment date, accomplishments, role, etc. Make it really crisp and professional. Basically, you need to make a laundry list of duties at the current job.

#4 The Education Section Ought To Be The Silver Lining

Sure, you’ve got the skills and experience, but you need to highlight your education as well. Write your college and university name, location, the degree you received, years you studied, and so on. Were there any achievements during high school and university? If yes, highlight them really quickly in your financier resume.

Check out a finance resume example before writing your educational background and work experience. It’s time to beef up the resume with your educational qualifications, but don’t go overboard. It should come right above the work experience section.

#5 It’s Time To Highlight Your Financial Skills

Why should the financial company hire you? You need to give them a solid reason for hiring you.

Here are a few examples of interpersonal skills you should mention:

• Cash handling
• Credit management
• Debt management
• Due diligence
• Time management skills
• Financial analysis
• Computer skills
• Negotiating
• Account reconciliation
• Risk assessment
• Conceptual skills
• Microsoft office skills
• Problem-solving skills

As a financier, you need to be focused on solutions, and not problems. You need to give assurance to the future company that you can handle any financial situation like a PRO. But don’t sound like a snob. You always have something to learn along the way.

Concluding Thoughts

With these five tips, we’re sure you are going to make a winning financier resume. Make sure everything is covered and the dates are proper. Don’t confuse the hiring manager with a poorly structured resume.

The post Top 5 Tips To Create a Job-Winning Financier Resume first appeared on Economic Journal.

Whether you are looking for the ideal place to set up a new company, plan to expand, or arrange or attend a business conference or networking event, keeping an awareness of the UK’s business hotspots can give you the edge when it comes to professional success.

However, If you search for your next business move, here are some of the best and biggest you should consider; cities with great transport, workforces, cultures, economies, and acclaim.

Leeds

The largest financial hub outside of London (it’s home to the Bank of England’s only non-London base), and a heavy hitter when it comes to both law and the digital economy, Leeds is growing fast. It benefits from excellent rail transportation links from London, Edinburgh, Manchester and beyond, and has a blossoming culture and economy that’s attracting and retaining top talent.

Edinburgh

With an excellent track record of innovation, leading research institutions and biomedical funding bodies unparalleled in the country, Edinburgh is a great choice for aspiring businesses. According to analysis from Management Today, the Scottish capital came top in the magazine’s Best Cities for Business 2022 rankings, owing to its ‘vibrant, future-facing’ nature, ‘much-vaunted quality of life’, strong economy, skilled workforce and much more.

Manchester

Arguably the capital of Northern England, Manchester has a high-quality and wide-ranging availability of talent thanks to its many top-flight universities and one-of-a-kind culture which keeps graduate talent in the city. That’s made it a great choice for professional businesses of all colours, from tech to legal, through to finance and creative.

If you’re looking for a northern hub, Manchester’s location on the rail route between Liverpool and Leeds is highly beneficial too.

Birmingham

Compact and centralised Birmingham is often referred to as the UK’s second city for good reason. It’s home to the leading business school of Birmingham City University, has a large and growing business district and the venerable law firm hub of Colmore Row, and has a great availability of inexpensive office space to boot.

As we mentioned, the city is easy to get around too, and will soon benefit from augmented transport links via HS2.

There are so many places to start a business in the UK outside of London. Think there’s a city missing from our list? Be sure to get in touch and let us know!

The post Forget London: These Are the UK’s Next Biggest Business Capitals first appeared on Economic Journal.

With costs rising across the board, businesses more than ever need to consider crucial methods for cutting costs.

A Disastrous Economy

The need for cost-cutting arises from the uniquely dire economic circumstance in which the UK currently finds itself. A year of high inflation has wreaked havoc on both consumer markets and business costs, with energy in particular seeing a stark rise in price year-on-year.

Businesses, which do not enjoy the same price-cap protections as domestic households, have seen their energy overheads increase as much as tenfold in some scenarios.

The problem was exacerbated by a disastrous economic proposal put forward by short-lived Prime Minister and Chancellor Liz Truss and Kwasi Kwarteng respectively. Their October ‘Mini-Budget’ sought to stimulate growth, while the Bank of England was actively attempting to stymie growth.

The result was market instability, steeper inflation, and higher rates of interest altogether – rendering credit and debt more expensive than before.

Key Methods for Cutting Costs

But in what ways do businesses respond to such economic stressors?

As the cost of borrowing grows ever higher, alongside the cost of raw materials, manufacture, logistics and even imports, it is of crucial importance that businesses seek unique ways to curb their spending.

The first port of call for many businesses is their supply network. Difficult times are as good a time as any to renegotiate with suppliers, or to seek out new suppliers entirely. For trade businesses, finding a new raw material wholesaler might unearth helpful medium-term savings.

With energy being one of the leading cost burdens of the current economic situation, mitigating energy usage is another strong point of attack for saving money. Business premises might start with behavioural change, such as the turning off devices and heating systems after working hours. For industrial businesses, energy-efficient investments are the better option.

As a last resort, there is the matter of staffing. In times of economic downturn, individual businesses will experience reduced success. This might justify targeted redundancies, to limit labour costs and recoup money in the medium term.

But this can harm long-term prospects if not done carefully.

What Does the Future Hold?

These are all relatively short-term changes a business can make to weather an economic storm. They have long-term impacts, and do not necessarily need to be reversed, but they may not be enough if the economic landscape does not change for the better soon.

However, there is evidence to suggest that 2023 will be just as difficult, if not more so for businesses. Goldman Sachs predicts a significant recession event in 2023, being a period of growth decline that sees consumers spending less and less. This could be existentially bad for businesses unable to pivot to new income streams or contain their own costs.

The post Will Businesses Lay Off Workers in 2023? first appeared on Economic Journal.

But how can you identify those brokers? In this article, we’ll outline some critical factors to consider when choosing a UK-based forex broker. Read on to learn more.

The importance of forex brokers in the UK economy

The forex market is the world’s largest and most liquid financial market. It trades 24 hours a day, five days a week, and has a daily turnover of over $5 trillion. That’s more than any other financial market. The UK is one of the most significant participants in the forex market. In 2016, the UK’s share of global forex trading was 12%. That means that 1 in every eight forex trades was made by traders based in the UK.

Given the size and importance of the UK forex market, it’s no surprise that many forex brokers are operating in the country. In fact, according to Finance Magnates, there are over 150 retail forex brokers in the UK.

How to identify the best forex brokers in the UK

With so many brokers to choose from, how can you identify the best ones? Here are some key factors to look for:

Regulation

Regulation is the first and most important thing to consider when choosing a forex broker. In the UK, forex brokers must be authorized and regulated by the Financial Conduct Authority (FCA). The FCA is a government body that oversees financial services firms operating in the UK and has strict rules and regulations that firms must comply with.

When choosing a forex broker, ensure they are authorized and regulated by the FCA. You can check this on the FCA’s website. If the FCA does not regulate a broker, you should not trade with them.

Reputation

Another vital thing to look for when choosing a forex broker is reputation. A broker’s reputation can tell you a lot about the quality of their service.

Do your research and read online reviews before opening an account with a broker.

Trading platforms and tools

When choosing a forex broker, you should also consider their trading platforms and tools. Some brokers offer proprietary trading platforms, while others offer popular third-party platforms like MetaTrader 4 or cTrader.

Test out the platform before opening an account to ensure it’s user-friendly and has all the features and tools you need.

Customer service

Another critical factor to consider is customer service. You should be able to contact customer service quickly if you have any problems or questions. Make sure to test out the customer service before opening an account.

Pricing

Finally, it would help if you also considered pricing when choosing a forex broker. Some brokers charge a commission, while others charge a spread.

Make sure to compare pricing between different brokers to find the best deal.

The benefits of working with a top forex broker

There are many benefits of working with a top forex broker.

The main benefit is that you can trade confidently, knowing you’re working with a reputable and reliable firm. Top forex brokers are also typically well-regulated and offer robust trading platforms and tools. Another benefit of working with a top broker is accessing better customer service.

If you have any problems or questions, you’ll be able to get in touch with customer service quickly.

Finally, top forex brokers typically offer competitive pricing, which means you can save money on your trades.

The risks associated with working with a bad or inexperienced forex broker

There are also risks associated with working with a bad or inexperienced forex broker.

The main risk is that you could lose money. If a broker is not reputable or reliable, they may not handle your money correctly, which could lead to you losing money on your trades. Another risk is that you may not have access to the best trading platforms and tools, making it difficult to trade effectively.

Another risk is that you may not be able to get in touch with customer service quickly if you have any problems or questions. Finally, if a broker offers bargain-basement pricing, you may pay more for your trades than you should.

In conclusion

When choosing a forex broker, consider regulation, reputation, forex trading platforms and tools, customer service, and pricing. Working with a top forex broker includes trading confidently, having access to better customer service, and getting competitive pricing.

However, there are also risks associated with working with a bad or inexperienced forex broker.

These risks include losing money, not having access to the best trading platforms and tools, and the inability to get in touch with customer service quickly.

The post How to Identify UK’s Top Forex Brokers first appeared on Economic Journal.

Whether your financial objectives are to attempt to save for a home, set up your pensions for retirement, or prepare your kids for a prosperous future, getting assistance from a financial adviser can be a great approach to help you. Although it might sound difficult, we will go over what a financial adviser does and how you can make sure you find the right one to meet your financial needs.

Understanding your financial goals

First off, it is important for you to have a clear understanding of your financial priorities before beginning your financial journey to comprehend what you will need to do to achieve them. As a starting point, simply writing down where you want to be in a few years and what it would take to get there is advised. There are several options you may want to consider. Some of these may include creating a budgeting plan, paying off debt, beginning to have a pension, or looking for advice on how to start investing.

You will then be able to choose the financial services you require. Choosing to learn more about investing, for instance, would mean locating a financial advisor who specialises in this field, such as an investment consultant.

You might also consider hiring discretionary services, which entail having financial matters handled on your behalf, if you don’t have the required time or knowledge. In either case, you may start to effectively work toward your financial goals by recognising what they are.

So what is a financial adviser and how can they help?

A personal financial plan that will assist you in achieving your financial objectives is often created by financial advisors using their knowledge and experience. These strategies can involve making investments, initiating savings plans, creating a budget, or looking for other ways to strengthen your financial stability.

With this in mind, it’s also important to remember that there are numerous distinct types of financial advisers available.

Investment consultants: can assist you in building upon an existing portfolio, selecting the finest investments for it, or even starting one from scratch. If you want to increase your passive income, then this can be the best course of action.

Certified financial planners: can assist you with all element of saving, including retirement planning, budgeting, and investing. They provide a wider range of services.

Wealth managers: If you are affluent this would typically be your best choice as they are focused on handling clients with significant wealth and work on diverse tasks like major investments and  charitable donations.

How to choose the right one for you

Finding the appropriate financial advisor can be difficult, and the beginning of your financial journey may feel fairly daunting. But remember to take into account your own situation before looking at the numerous services that are provided to ensure that your counsel provides genuine value for your money by carefully preparing this.

The post How Can Financial Advisors Facilitate Your Financial Planning Journey? first appeared on Economic Journal.

Although there are many advantages of self-employment, one major disadvantage is not having access to a retirement plan that is sponsored by an employer, such as a traditional 401k. Luckily, there is a solo 401(k), which was specifically made for self-employed workers and has a lot of the features in an employer-sponsored plan without having to work for the employer.

What is a solo 401k plan?

It is a retirement plan which has been approved by the IRS and entails the same requirements and rules as a traditional employer-sponsored retirement plan. However, it is an individual retirement plan that is best suited for business owners who haven’t employed any workers. According to IRS rules, you cannot use this retirement plan if you have full-time employees.

The plan’s contribution limits

This retirement plan’s contribution limit is $61,000 in 2022 and there is a catch-up contribution of an additional $6,500 for a self-employed individual who is 50 years old and above. In addition, the plan allows the business owner to contribute annually to the plan as both an employer and an employee, which increases the annual maximum contribution limit. Thus, in order to fully understand this plan’s contribution rules, you need to think of yourself in two roles: as your own employer and as your own employee. As an employee, you can contribute $20,500 in 2022 and an additional $6,500 if you are 50 years old and above. On the other hand, as the employer, you can contribute a profit-sharing amount up to a maximum of twenty-five percent of your compensation.

Is it tax deductible?

The great thing about this retirement plan is you have the option to choose your tax advantage. For instance, under the traditional plan, the contributions are deducted from the employee’s paycheck before income taxes are calculated and deducted. However, with a Roth plan, the contributions are deducted from the employee’s salary after taxes have been subtracted from it.

Am I eligible for this plan?

If you own a business and you do not have full-time employees or earn income from self-employment, then you can open this account through one of many reputable solo 401k providers.

Can my spouse also make contributions?

Although there is a no-employees rule on this individual retirement plan, the IRS permits one exception; if your spouse earns from your business, he or she can also contribute to the plan. This is very beneficial because it can double the amount you can contribute as a family, depending on both of your incomes from the business. For instance, your spouse can make deposits up to the contribution limit of $19,500, plus the additional catch-up provision if they are 50 years old and above. Then, as the employer, you can contribute a profit-sharing sum for your employed spouse, amounting up to 25% of compensation.

Conclusion

This individual retirement program offers many benefits to the participants, such as the ability to make higher contributions, and engage in investments like real estate and stock, it offers stronger creditor protection compared to individual retirement accounts and is cost-effective.

The post How Do Solo 401(k) Plans Work? first appeared on Economic Journal.