ROTH 401ks are powerful tools for business owners. In fact I use this strategy myself each year as part of my overall financial strategy.
Here is the simple math even if you start today. You contribute $23,000(2024 Rules) to a ROTH 401k account, if you are on the business payroll.
If that money were to grow at 8% a year on average which is conservative because the S&P500 averages 10% since inception. Then over the next 30 years, until you are ready to retire, you would have over 2.7M in savings. Now as you retire and withdraw funds yearly this money is tax free!
Lets say your business is doing extremely well, you can add your wife on payroll and she can contribute another $23,000 to her own account (total $46,000) effectively combining your accounts to over 5.3M.
By the time you retire you should have a mostly paid off home, some real estate, and a million plus dollar ROTH IRA. These three asset sources will generate tax free income, of which most of it can go to enjoying life vs paying taxes.
