If you are self-employed and have no full time employees, then taking advantage of a Solo 401(k) or SEP IRA would give you the ability to make significant contributions and reduce your taxes.
If you are employed by someone else, or have employees, then your options would be limited in terms of making new contributions.
Best to discuss with your CPA.
Assuming you can sock away a good amount into a retirement plan, and/or have some previous 401(k)/IRA savings to start with, investing that tax-sheltered money into real estate or related such as mortgage notes could be a good option for diversification of the plan. Such investments would be wholly for the plan's benefit and not anything you would draw on personally at the current time.
Sep IRA. Use it to own a rental with mortgage. Income tax has changed this year.
Truly self-directed Solo 401k plan would probably be the best solution for you. It will allow you to shelter up to $55,000 per year of your income from taxes. While this is a great shelter it will also give you total control how to invest those funds. You will not be confined by the stock market limitations and can invest in alternative assets such as real estate, private lending, trust deeds, syndication, private placements, note funds, etc.
You may find this discussion helpful: http://www.biggerpockets.com/blogs/2810/blog_posts...
This plan is designed for folks who are self-employed or own a small business without full time staff. It has significant advantages over an IRA such as: no need for a custodian, ability to borrow from your retirement account, exempt from UBIT taxes on leveraged real estate, greater protection, greater flexibility and more.
Hope this helps and feel free to ask any follow up questions.
Congratulations on having a strong income. I'd also recommend the Solo 401k if you're eligible. It will allow you to make the largest contributions per dollar earned, thus saving more in taxes. It will also provide quite a few benefits over an IRA:
- Compared to an IRA, Solo 401k contributions limits are roughly ten times higher.
- There is no custodial requirement for the 401k.
- You don't need the additional expense and administration of an LLC to have checkbook control.
- There is a built in-Roth component whereas IRAs are either traditional or Roth, not both.
- A spouse can also participate in the same Solo 401k plan.
- The Solo 401k has additional tax benefits over an IRA when investing into real estate using leverage.
- The penalties for prohibited transactions are less severe, though it's best not to utilize this benefit :)