Oklem CPA's tax talk

A physician, dentist, attorney or consultant earning $400,000 or more from a practice has two retirement plan tools that go far beyond an ordinary IRA: the SEP-IRA and the defined benefit (cash balance) plan . Used correctly, together with a 401(k), they can move well over $200,000 a year out of the top tax bracket. This article lays out the 2026 contribution limits, explains why a SEP and a defined benefit plan usually should not be run side by side, and shows the combination that high earners actually use. SEP-IRA: simple, flexible, but capped A SEP-IRA is funded entirely by the employer. For 2026 the contribution for each participant is limited to the lesser of 25% of compensation or $72,000 , using a compensation cap of $360,000. For a sole proprietor the 25% is applied to net earnings after the deduction for half of self-employment tax and after the contribution itself, which works out to about 20% of net profit. Its strengths are real: no annual Form 5500, a plan can be open...

For years the biggest question about the 20% Qualified Business Income deduction was whether it would survive past 2025. It did. The July 2025 tax law made §199A permanent and, for tax years beginning in 2026, made it somewhat more generous. This article explains how the deduction is calculated, what changed, where the income limits now sit, and the planning moves that still matter for owners of pass-through businesses. The basic math If you own a sole proprietorship, partnership, LLC, S corporation, or rental real estate that rises to the level of a trade or business, you may deduct up to 20% of your qualified business income . QBI is the net income from the business, excluding wages you pay yourself from an S corporation, guaranteed payments from a partnership, capital gains, dividends and interest not tied to the business. The deduction is then capped at 20% of your taxable income minus net capital gains. It is taken after adjusted gross income, so it does not reduce self-employ...