Suze: July 12, 2026. Welcome everybody to the Women and Money podcast,
Suze: as well as everybody smart enough to listen. Today is
Suze: Suze School, and you are going to get out your
Suze: Suze notebooks. Do you hear me? And the reason is
Suze: very simple. You are going to want to write down
Suze: everything I am going to tell you today, period. Just
Suze: know that. But before I begin that, what I want
Suze: to say is this.
Suze: The markets are crazy. They're up, they're down. None of
Suze: you are going to own a stock that goes straight
Suze: up in this type of an environment. None of you
Suze: are going to own a stock that goes straight down
Suze: and doesn't return
Suze: to go back up again, if you have listened to
Suze: the kinds of stocks and ETFs that I've been talking about. So,
Suze: don't look at your portfolio every single day and go,
Suze: oh my God, this is down. It's down more. It's
Suze: down even more.
Suze: Listen to me and listen to me closely here.
Suze: You are not to be investing in the stock market,
Suze: unless you have at least five or 10 years or
Suze: longer till you need this money, minimum of five, all right?
Suze: And therefore, what good does it do you for these
Suze: markets to go up and up and up on paper
Suze: because you haven't cashed out yet when you're not going
Suze: to cash out and your dollar cost averaging, which means
Suze: your dollars are buying less shares because of what you're
Suze: buying is more expensive. So when things go down, things
Suze: that you want to own.
Suze: That is the time that you really want to dollar
Suze: cost average once a month, every three months, whatever it
Suze: may be. So this is not the time to freeze.
Suze: This is not the time to sell. This is not
Suze: the time for you to think that you're going to
Suze: outsmart these markets. You will never outsmart these markets.
Suze: These markets will always teach you what you need to know,
Suze: which is what consistency. The sooner you do something, the better.
Suze: The longer you hold, the better, especially if it's a
Suze: good quality ETF and or stock, bond, whatever it may be.
Suze: So just you be consistent in a time when this
Suze: world could not be more inconsistent if it tried.
Suze: So as long as we're still at war, we're out
Suze: of war, we're back in war.
Suze: I'm telling you, nothing will absolutely go straight up or
Suze: straight down. So, just know that, OK? All right, are
Suze: you ready for Suze School to begin?
Suze: Now, a week ago, and I think it was just
Suze: a week ago, I told you that I would do
Suze: a Suze School on the difference between a SEP IRA
Suze: and a solo Roth 401k. So for those of you
Suze: who are self-employed...
Suze: This is for you. You're your own boss, whatever it
Suze: may be. Maybe you're just selling candles on Etsy. Maybe
Suze: you're driving a rideshare on Saturdays, whatever it may be.
Suze: As long as you don't have any employees and you
Suze: have a business, you are essentially self-employed, so you need
Suze: to listen up.
Suze: And you need to listen up to the difference between
Suze: the solo Roth 401k and the SEP IRA. So, it
Suze: is important that you understand the difference, because I'm here
Suze: to tell you, you can save either two times, three times,
Suze: or more, seriously, as much in a solo 401k versus
Suze: a SEP IRA on the exact same income.
Suze: So for those of you who have a SEP IRA,
Suze: you have no employees, you best listen up because in
Suze: most cases you are making a mistake and a solo
Suze: 401k would be absolutely the way to go. However, there's
Suze: one other thing you need to listen up and understand.
Suze: I can hear it now.
Suze: I can hear it. A lot of you have already
Suze: heard me say no employees, and you're thinking to yourself,
Suze: but Susie, I have a helper who comes in a
Suze: few hours a week, or my daughter works summers for me.
Suze: And you're trying to get around the rules possibly, but
Suze: you need to understand the definition of an employee, and
Suze: the definition for an employee in these two cases is
Suze: not a full-time employee. What matters is this
Suze: How much they work and how long they have been
Suze: with you and the two plans they measure it completely
Suze: differently so take notes here.
Suze: The solo 401k counts hours. So once someone works 500
Suze: hours a year, listen everybody, that's just 10 hours a
Suze: week for two years running. They're in your plan whether
Suze: you know it or not, and the solo part, the
Suze: solo is over. It's over. You don't qualify anymore for
Suze: a solo 401k.
Suze: Remember, a solo 401k means one person, of course, unless
Suze: the other person is your spouse. So be careful here.
Suze: The SEP IRA does not count hours at all. It
Suze: counts years. Somebody works for you in three of the
Suze: last five years, even just a few hours here and there.
Suze: It is probable that you will owe that person the
Suze: exact same percentage you give yourself. So if you're paying
Suze: yourself 10% of your compensation, you're going to have to
Suze: give it to them as well.
Suze: So, again, an occasional worker here and there, really, you're fine,
Suze: but be careful, because you're a steady part-timer of several years.
Suze: Watch out, cause you're going to owe them money. And
Suze: I just have to give you one warning. All right, everybody,
Suze: I know, I know, cause all of you always try
Suze: to get clever. Do not go calling a real employee,
Suze: a contractor, just to protect your plan.
Suze: That's a trick, everybody. Remember, I always tell you, stand
Suze: in your truth. That trick, if caught, creates IRS problems
Suze: that make all of this really look like a picnic
Suze: for you. So, I just want you to understand when
Suze: I'm saying employees throughout this podcast, exactly what I am
Suze: talking about. OK, are you ready? Let's begin. Here's what
Suze: I want you to do:
Suze: On a piece of paper in front of you and
Suze: you all need to get that out now really if
Suze: you don't have it.
Suze: I want you to draw a picture of two hats,
Suze: two hats. They can just be a square, OK? Just
Suze: think of them as hats, side by side. Under hat
Suze: number one, I want you to put the word worker/employee
Suze: under it.
Suze: Just do that for me for now.
Suze: Under hat number two, I want you to put the
Suze: words boss/employer, just that simple.
Suze: Now, assuming again you work for yourself and you don't
Suze: have any employees, I want you to listen up.
Suze: When you work for yourself, you wear two hats. I
Suze: want you to think about it. You are wearing the
Suze: worker hat, when you are doing the actual work, you're
Suze: designing the logos, you're coaching the clients, driving the car,
Suze: whatever it may be.
Suze: However, when you sign the checks, make all the decisions,
Suze: pay the taxes, you are wearing the boss hat. So
Suze: in reality, you always wear two hats.
Suze: An employer hat and an employee hat. You can think
Suze: of yourself as the worker or the boss, either one,
Suze: but you wear both those hats. Now why do I
Suze: care and why should you care about these hats? Very simple,
Suze: because that is the entire difference between the solo 401k
Suze: and the SEP IRA.
Suze: So, the solo 401k lets both hats contribute.
Suze: The worker hat and the boss hat. The SEP IRA
Suze: only lets one hat contribute, and that is just the
Suze: employer or the boss hat.
Suze: So, two hats are obviously better than one, when it
Suze: comes to contributions, cause you have both sources contributing.
Suze: Do you get that? Think about this. Just put a
Suze: pin in that for one second. Think about the 401k, 403B,
Suze: whatever it may be, as an employee. When you have
Suze: an employer sponsored plan.
Suze: You contribute and your employer contributes. When you have an
Suze: individual IRA only you contribute.
Suze: And if you think about that, you get to contribute
Suze: more
Suze: in a 401k, 403B, TSP, whatever it may be, than
Suze: you do in an individual IRA. The same is true
Suze: for a SEP IRA only you can contribute versus a
Suze: solo 401k where you can contribute as the employee and
Suze: the employer. Does that make sense to you?
Suze: So therefore, let's begin with what is a SEP IRA.
Suze: A SEP IRA, better known just as a SEP, stands
Suze: for Simplified Employee Pension. I want you to notice the
Suze: words Simplified Employee Pension. Why do they call it that?
Suze: Because first of all, everybody, it's simple. It takes maybe
Suze: five minutes to set up. Next.
Suze: Look at the word employee. It is set up for
Suze: the benefit of an employee, and how does an employee benefit?
Suze: They benefit when the boss puts in money for the employee, period.
Suze: The employee cannot put in money. Only the boss can
Suze: put in money. So it is your boss hat when
Suze: you are setting up a SEP
Suze: that contributes. So the question is how much can the
Suze: boss put in. And remember, if you're self-employed and you
Suze: set up a SEP, you are the boss putting in
Suze: money for your own benefit, but only the boss can
Suze: put it in.
Suze: So how much can the boss put in? Write this down,
Suze: 20 to 25% of your compensation up to a max
Suze: of $72,000. Now just so you know, to be able
Suze: to hit that mark of $72,000,
Suze: you have to have compensation of anywhere between $288,000 and
Suze: $360,000 a year depending on if you're an S corp
Suze: or a sole proprietor. Just know that that's not a
Suze: big deal, but that's the whole story for the simplified
Suze: employee pension plan, the SEP.
Suze: So after $72,000 is reached in that plan, that's it,
Suze: it closes.
Suze: You cannot put in any more money. There are no
Suze: catch up contributions, nothing when you turn age 50. Nothing
Suze: is going to matter except that most people open up
Suze: a SEP IRA, is its technical name,
Suze: at a brokerage firm, where you can buy and sell
Suze: anything you want, you own control over what's in there,
Suze: all of that, that's how you normally do it. OK,
Suze: I'll get back to that in a second.
Suze: Now, just remember, it's a maximum of 20 to 25%
Suze: of your compensation that you can put in, and to
Suze: get close to that $72,000 you are making at least
Suze: approximately $300,000 a year. Just know that.
Suze: Let's leave SEPs for one second and switch to the
Suze: solo 401k. Now, you might wanna draw two boxes again.
Suze: And under this, you do the exact same thing as
Suze: I asked you to do for the SEP. Again with
Suze: the SEP, notice that the only hat that's allowed to
Suze: contribute is the employer hat. Let's do the solo 401k.
Suze: You have two boxes.
Suze: An employer box or the boss, an employee box or
Suze: the worker, all right.
Suze: And again, for people who are self-employed with no employees,
Suze: you can have your own solo 401k. And by the way,
Suze: if your spouse works for the business, they can have
Suze: their own solo 401k as well, just so you know.
Suze: So let's look at the contribution limits under the solo 401k.
Suze: Now under the boss hat it works identical to the
Suze: boss hat of the SEP IRA. Those two hats, whether
Suze: it is a SEP IRA or a solo 401k, are identical. Again,
Suze: 20 to 25% of compensation, up to the same 72,000
Suze: overall max, identical, no difference there.
Suze: However, listen closely to me now. Unlike the SEP IRA,
Suze: the solo 401k does allow the employee or the worker
Suze: to contribute. So under the worker hat, now listen closely,
Suze: just like in your employer 401k, 403B TSP where you
Suze: may work or you did work, the solo 401k works
Suze: the exact same way.
Suze: You can put up to write this down under that hat,
Suze: up to $24,500 for 2026 if you're under 50.
Suze: If you're 50 or older, the catchup contribution is $8000
Suze: so you could put in this year $32,500 in that hat.
Suze: If you are 60, 61, 62, your catch up jumps
Suze: to $11,250 for a total of you having the ability
Suze: to put in $35,750. Obviously after the age of 63,
Suze: it drops back to $32,500. So let's just compare the two.
Suze: Just let's compare them.
Suze: And a SEP IRA, let's just say you're an S
Suze: corp paying yourself $75,000 in W-2 wages, so 25%, which
Suze: is what you are allowed to put in to accept
Suze: the most of that $75,000 is $18,750. That would be
Suze: your max contribution.
Suze: Or let's say you're a sole proprietor maybe with $75,000
Suze: of net Schedule C profit, and for those of you
Suze: who are self-employed, you know what I'm talking about, but
Suze: just listen to me. You could put in about $13,900
Suze: max in your SEP IRA. Now let's just look at
Suze: your solo 401k.
Suze: The same 75,000 gets the same 18,750 or 13,900 under
Suze: the boss hat contribution that doesn't change. However, it doesn't
Suze: stop there for now.
Suze: You put your worker hat on so you can also
Suze: contribute an additional $24,500 if you're under 50 $32,500 if
Suze: you're 50 or older, $35,750 dollars if you are 60
Suze: to 63.
Suze: Are you kidding me? And you would add either $13,900
Suze: or $18,750 to any of those numbers so you can
Suze: now see how many thousands more you could put away
Suze: in a solo 401k.
Suze: Did you hear what I just said to you? Why
Suze: in the world would you be doing a SEP IRA
Suze: in most cases? I'll tell you why in one second.
Suze: But for most of you, listen again that are self-employed,
Suze: whether you are a sole proprietor or a subchapters, whatever
Suze: it may be, you are far better off doing.
Suze: A solo 401k versus a SEP IRA to the tune
Suze: of tens of thousands of dollars more per year. Quizzy time, everybody.
Suze: Because I wanna make sure that you get this. This
Suze: is so important. I can't even tell you. And for
Suze: those of you who are like, Oh, Suze, I can
Suze: barely fund my IRAs, whether it's a Roth or traditional
Suze: right now. I can't do anything. You need to listen
Suze: to this because one day you don't know what the
Suze: future holds for you, do you? You don't know. So
Suze: understand the rules now, so if ever you become self-employed,
Suze: you'll know which retirement account to choose. Just that simple.
Suze: As long as you have no employees, it's just you.
Suze: This makes sense. All right, now, let's just say Diane
Suze: is a freelance graphic designer. She's 42.
Suze: And she wants to open a SEP IRA.
Suze: And her business nets her enough that her boss hat,
Suze: 'cause she is the boss, and that's the only hat
Suze: that can contribute to a SEP IRA.
Suze: It is enough to allow her to contribute $12,000 this year.
Suze: So Diane opens a SEP IRA. Here's your question. This
Suze: is an easy one for you. How much can Diane
Suze: put away for retirement in her SEP IRA this year?
Suze: Write down your answer.
Suze: And you should have written down $12,000.
Suze: Now, same Diane, same income, same year, same age, but
Suze: this time, Diane opens a solo 401k instead. How much
Suze: can Diane now contribute totally to her solo 401k? Write
Suze: it down.
Suze: Now I'm gonna give you a few minutes here.
Suze: Because remember in a solo 401k she has two hats
Suze: the boss hat, which she can put in $12,000 but
Suze: the worker hat or the employee hat where she can
Suze: put in up to x. What is that? Add them together.
Suze: Did you get it right? The answer is $36,500. Same woman.
Suze: Same business, same exact income, but three times the retirement savings.
Suze: Once again, why? Because within her solo 401k she can
Suze: put in for the employee and the employer.
Suze: So again, her boss hat puts in the same $12,000
Suze: and the worker hat allows her to drop in another
Suze: $24,500 on top of that. That's how we got to
Suze: the $36,500 because remember Diane is under 50. So do
Suze: you get it everyone?
Suze: Now, I gave you a hint of who does it
Suze: make sense for a SEP IRA versus a solo 401k.
Suze: And here's the thing, if you're under 50, earning roughly
Suze: $29,000 to 360,000 depending if you're an S Corp or
Suze: sole proprietorship.
Suze: It might make sense for you because it's simple, same
Suze: amount of money, whatever it may be. However, everyone else,
Suze: every age, every income, the solo wins on the math.
Suze: But the solo also wins in another way. So listen
Suze: closely here, OK.
Suze: You know how I feel about Roth's. You know I
Suze: want your retirement money to grow tax-free, have tax-free withdrawals,
Suze: and that is the greatest gift you will always give
Suze: your future self. You know that.
Suze: The solo 401k, guess what? It can also be set
Suze: up as a Roth solo 401k. So, if you are smart,
Suze: you open up a Roth solo 401k, your entire worker
Suze: hat contribution, every penny of that 24,500 plus, depending if
Suze: you're 50 or older, so the catchups goes into the Roth.
Suze: As much as you possibly can put in up to
Suze: those maxes. However, most firms don't let you put in
Suze: the boss hat in a Roth, all right, they just don't. However,
Suze: I think Schwab currently allows you to do that, so
Suze: you need to check it out before you do so. However,
Suze: even where you can, and now this becomes complicated, so
Suze: just listen to me for a second, even where you
Suze: can put in the boss hat in a Roth section,
Suze: and for reasons like I just said that are too
Suze: complicated for this particular Suze School, you may be better
Suze: off just maxing out the boss hat in a pre-tax anyway.
Suze: And to just make it simple, this is because of
Suze: something known as the QBI deduction, and it's a tax
Suze: break many business owners get. So here's what I want
Suze: you to do, especially if you're making larger amounts of money.
Suze: Talk to your CPA and see if it makes sense
Suze: to designate the employer your boss had money to the
Suze: pre-tax side or to the Roth.
Suze: And in case you have to designate it to the
Suze: pre-tax side.
Suze: Remember, pre-tax isn't a life sentence. It's a conversion waiting
Suze: to happen, and you will convert it in lower income
Suze: years like a slow business year, a sabbatical, the gap years,
Suze: whatever it may be. Got that.
Suze: So, those are the two differences. I just want to
Suze: take one more minute of your time, maybe 5, we'll see,
Suze: and talk about a SEP IRA cause many of you
Suze: may choose to still do a SEP IRA.
Suze: Now, even though the Secure Act 2.0 says legally you
Suze: can set up a SEP Roth IRA, I don't know
Suze: of any brokerage firms really that allow you to do so,
Suze: and I think a lot of that has to do
Suze: with the QBI and everything that I just mentioned before. However,
Suze: you can set up a SEP IRA.
Suze: Put money into it.
Suze: Obviously, it's pre-tax, so you get to take a tax deduction.
Suze: You immediately, however, if you want, can then convert it
Suze: to a Roth IRA, no income limitations, nothing.
Suze: And even though you're going to owe tax on that money,
Suze: you got a deduction when you put it into the SEP. So, basically,
Suze: it will offset it when you then convert it. That's
Suze: a way to get a lot of money, more than
Suze: a Roth IRA to begin with or whatever, into a
Suze: SEP IRA that can then convert to a Roth IRA.
Suze: Got that? So, this really is just one last thing
Suze: that I want to say.
Suze: Half of you listening have a day job. You have
Suze: an employer sponsored plan, such as a 401k, 403b, whatever
Suze: it may be, OK? And you have a side hustle,
Suze: a side business that you've started on your own, and
Suze: that business may be taking off. Maybe you're an influencer
Suze: who knows what you are.
Suze: And you are making a lot of money in that
Suze: side business, besides what you are making at work.
Suze: Your worker hat limit, that $24,500 or more, depending on
Suze: your age. Remember, if you're 50, there's, it's more, if
Suze: you're 60 to 63, it's more, is per person, not
Suze: per plan. So maybe you're doing great again at work
Suze: and you want to open up a solo 401k. If
Suze: you max out the 401k at your day job.
Suze: Then your worker hat is done for the year, period.
Suze: You cannot put one more dime into the worker hat
Suze: into your solo 401k.
Suze: However, here's what you need to get:
Suze: Your boss hat limits are separate for each business, so
Suze: even after you've maxed out at work, you have that
Suze: side business, whatever it may be, you can still open
Suze: a solo 401k.
Suze: And make the boss hat contribution to your solo 401k
Suze: or solo Roth 401k if your CPA says it's OK.
Suze: So that is a whole extra hat.
Suze: So to speak, to help you with tax advantage savings,
Suze: and most people don't even know the door exists, so
Suze: you need to understand that now just one exception, I
Suze: just have to say, government workers, if you're listening, if
Suze: you have a 457B, it has its own separate limit,
Suze: so it doesn't count against your worker hat. So even
Suze: if you max out at work with that,
Suze: you start your own solo 401k, you can max out,
Suze: if you want, your worker hat in that as well.
Suze: Did I just confuse the heck out of all of you?
Suze: It's actually very, very simple, so you have to think
Suze: about this. Everybody, here's the bottom line for most of
Suze: you working for yourself, as long as you don't have
Suze: any employees, please choose the Solo 401k Roth for the
Suze: worker hat.
Suze: And pre-tax or after tax for the boss hat, depending
Suze: on what your CPA says, just make sure you open
Suze: it by December 31st. That's the deadline for the year
Suze: to open one up.
Suze: Now, whichever plan you choose, just remember the plan is
Suze: just the container. What makes you secure is what you
Suze: put in it, month in and month out and leave
Suze: it alone to grow. Now hopefully you seriously understand the
Suze: difference between a SEP IRA and a solo 401k, and
Suze: I think hands down.
Suze: The absolute way to go is with in most cases
Suze: a solo 401k. Now you know, so there's only one
Suze: thing that I want you to remember when it comes
Suze: to your money, and it is this people first, then money,
Suze: then things. Now you stay safe. By the way, don't
Suze: you miss KT? I do.
Suze: All right, bye bye.