No. of Recommendations: 0
Decath and Saydiver,

Again, thanks for the suggestions for my calculations.

I've plugged the numbers into Turbotax 2004 estimator and what I found was, unless I can fudge the Schedule C with business expenses beyond just the 401(k) contributions, even contributing $41K would leave us paying MORE in taxes than going the W2 route. I was pretty amazed. Even though taxable income would be $18,500 lower, total taxes would be $3,675 higher. This assumes we even could make $41K in contributions each year, cash flow-wise.

Now, granted, as time goes on, we will end up with taxable investments that could swing the pendulum, since the opportunity of putting that money into tax deferred would reduce the tax bite from interest/gains taxes. But, we don't know how long this gig will even last.

So, at this point, I think we'll go the W2 route and keep our eye on it.

Again, thanks for your help. It really clarified my thinking on this and now I won't be wondering if we made the right decision.

3MM
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.