The Jon Sanchez Show
10/07-Last minute tax savings for the entrepreneur.
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See color action, I think, is what have been appropriate, but well good. Yeah, it's been a sideways, I mean, the last week and a half, you look at the chart of the S&P and it's just up, down, up, down, up, down, but going nowhere. You know, we'll certainly touch on it more in the show, but the VIX index keeps picking its head up more and more and more. You know, the trade was to buy the S&P when VIX was above 22 and sell it when it was sort of below 12. You know, you wonder whether some good news will come and volatility will be quieted, or like we talked about last week, the more Gaza, Israel stuff we keep hearing is keeping volatility bid. And then obviously interest rates go in the opposite direction. What the Fed's trying to do is sending a message as well. So there's a lot of cross-currents for sure in oil in 70s, something's not open. Yeah, I think, you know, as we discussed on Friday, just to jump right into, as we discussed on Friday, this market's looking for something to seek its teeth into. We do have earnings, of course, officially kicking off at the end of the week. But in the meantime, it's like, okay, what do we have now? And it's really, you know, as we do, they'll bin Franklin tea. What are the positives? What are the negatives? It's hard to fill up that positive, you know, left-side column. The negatives are, you know, you can put a lot of things in there. You've got a hurricane barreling down on Florida. You've got, obviously, as you mentioned, the Hamas Israel situation. You have oil prices skyrocketing in relation to both of the aforementioned. And then, of course, you have now a 10-year yield that broke above the 4% mark. So, yeah, just getting nowhere fast. I mentioned that on one of the stock updates this morning with Ryan. It's like, man, we are just getting nowhere. I think I had three reports where it just, you were in, like, a 20-point trading range. It just would not budge. But, you know, looking back, I should have kept my mouth shut, because that would have been a lot better than the pain we experienced going into the close and got a little bit of a rebound. But boy, oh boy, you know, worst-level folks were down over 500 on the Dow, finished down 399. But, you know, like I said, it was kind of a day where they were just, as Il saying goes, throwing the baby out with the bath water, there was nothing they really liked whatsoever. And so, yeah, we'll touch on all that in great detail. First, let me tell you what, Jason, I have lined up for you this evening or this afternoon. So here we are, eight days away from October the 15th, which, of course, is when your 2023 return is due, if you are on an extension, whether you're a personal extension or business. But you business owners, we're going to focus in on you this afternoon, because if you are a business owner and you owe the IRS money, you may think there's nothing you can do. Wait a minute, I got the April 15th deadline to fund my IRA, and I didn't get a chance to set up a 401k. You know, there's nothing I can do. I'm out of time. We're obviously in a brand new year, and so on and so forth. But in reality, there is something you can do. Now, you don't have much time. We can help you. You can call our office and we can get it done. But you can get this done. And what we're going to talk about this afternoon is a tax strategy for you, the small business owner, that potentially could save you money when it comes to your taxes. And that's all I'm going to tell you. I'm not going to tell you what it is yet, because I want to kind of surprise you. But Jason, I think you find, you know, this time of the year, again, as people are having these last minute meetings with their tax advisors to wrap up their 2023 tax return, again, if they're on extension. And again, our strategy tonight is only for the business owners. If you're an individual, there's really nothing you can do at this point. That you business owners, you do have some options, but right now, Jason, I know a lot of business owners are out there scrambling going, Oh my God, you know, I don't want to write this check to the IRS. Is there anything, anything whatsoever I can do? And I hope our solution tonight can help some of them out. And I think it lines up with tax deferred investments in general, right? You can talk about folks with their own 401ks, right? Those are ways that you're able to reduce your own. I mean, if you're an individual and you work for a company, you're still in the business of you, right? And trying to come up with ways to reduce that tax burden at the end of the year are, you know, unfortunately, few and far between with the standard deduction. Most people aren't, you know, heavily tracking what they're deducting in their personal life, but you know, trying to reduce that income side of the equation as far as the government's concern is part of what our sort of suggestion is for smart businesses. We're not saying we're not telling you to earn less money. Right. Ernie, you know, just stop working now, which make a lot of money. We want you to make a lot. Yeah. All right. So we'll get to that here momentarily. But first, we have a lot of things to touch on again with this market situation. So Jason, let's go back to the beginning of the day. Well, let's go back to Friday. Remember, Friday was was a really strong session. We had the nonform payroll numbers come in. Number was pretty much a viola expectations, well above expectations. You know, we were only looking for 150,000 jobs got, you know, basically more than double that number. Dow finished at a record close on Friday, up 341, NASDAQ was up 219, S&P gained 51. So we went into the weekend with a lot of optimism, but it's our job always is behind this microphone, as well as the way we manage money for our clients. We have to be the black cloud. We always have to be looking, what's lurking around that corner, right? Can this market get upset about? So we start today off and, you know, we awake to triple digit declines in the in the Dow futures and, you know, my first update at 523 this morning, we're down triple digits also on the NASDAQ side down about 106. That was right before 530. And so the market just had a negative tone to it this morning. We had a couple of downgrades of some big names like Amazon and Apple and you never want to start the day that way. Both of those stocks came under pressure that we'll tell you about in a moment. And then of course, nothing happened, thank goodness in Israel over the weekend. There was a lot of apprehension, as we mentioned also on Friday, going into the weekend and being long. A lot of times people don't want to do that of when there's potential geopolitical problems. Luckily, that didn't happen, but when you agree in, again, I always hate, I always apologize when I bring in the word feelings into market analysis, but didn't this market kind of have a feeling this morning that there was, there was just like a lot of, I don't know, lack of conviction, nervousness. Just not a lot of things again to get very excited about and then it kind of took off from there. So take us from opening Bell right through the close. Yeah, I think you're spot on with needing a catalyst, right? We've got CPI, PPI later this week to give at least some inflation color. I know one of the Fed members, Kashkari, was out making some comments today that the market reacted slightly negative too. Well, clearly a downgrade of Apple and Amazon finally doesn't help. I think Apple was downgraded at Jeffries in Amazon at Wells Fargo. People are going to start to pull away on some of the mega caps just to remember these analysts, their game is to upgrade and downgrade and they get a scorecard as to where they bought and where they sold. And so that's a lot of times what they do is take money off the table, right? And it's just metaphorical, but it's not dissimilar to what folks do when they're real portfolios. But I think that those didn't help. I think like we talked about, maybe this hurricane coming into Florida, given it's coming up through the Gulf area, isn't the best thing in the whole wide world too on the back of what they're just dealing with very recently in those folks in North Carolina and Tennessee. So that could be a bit of it as well, maybe just a little bit of concern of, "Oh gosh, who knows that oil prices are going to do if this thing moves around and rips through the Gulf and then looks as ugly as it does?" I feel like fortunately we tend to get a lot more hype and then they end up being fours and threes and twos and then really it was just rain off of this recent one. Maybe people are more sensitive again, just given how bad this rain was, causing a little bit of profit-taking. I really think that in interest rates now, north of 4% are taking some a little bit back as to why is the 10-year going up literally rates have gone straight up since the Fed cut. And that's what we've talked about before as a retail investor, if you're making choices because of what you read, the newspaper, guess what, you're nine months late. That could be a bit of what people are seeing too. But oil at 77 and change, which you and I have been assuming it was going to be the case, just given how oversold the oil has been. Maybe people are starting to react to it a bit, but no real data outside of that. We're going to really get some economic news, like we said later in the week. Yeah, the inflationary data, and then like we said, Ernie's numbers. I want to go back to your comment on the Hurricane Milton, as they're calling it, got a firsthand experience of this today. My wife's parents live in Florida right outside the Tampa area, and luckily they're not there now. They also have a home in Michigan. And so she called her mom a little while ago, and mom just like, yep, they evacuated the RV park, or it's on RV park, but a mobile home, whatever park, like there's a million up in there. They evacuated everybody out of that, and she was talking to the mom. My mother-in-law was talking to the neighbors and stuff, and it's just, it's absolute chaos there. Just absolute chaos getting ready for this thing. But yeah, they upgraded it to a category 580 mile an hour winds. Only really one beneficiary, well, I'm sure the retailers are doing very well, but we'll kind of throw one in there. Generated. You see what that thing is doing? Yeah. Good gosh. Interact holdings, of course, up $14.57 and 9.1% gain to 174.75. It's like clockwork, Jay, every time there's a major storm in the snowstorm, whatever the case is. That's the trade. Yep, that's the trade. And it absolutely is. So thoughts and prayers with everybody in the path of Hurricane Mammalton. All right, we'll come back with some of the movers and shakers touch a little bit more on oil prices and so on and so forth, and they'll get ready for our topic, which again, last minute tax savings for you, the entrepreneur. Turned over to Kristen Snow. She's in the right now. Traffic center. Kristen. How are you? Welcome back to the John Sanchez show on his stock, 780 kilo H with Jason Gont. All right, here's how we finished a three ninety nine decline on the downs. I've mentioned 0.94% lost to forty one thousand nine fifty four. Then as I gave up two hundred and fourteen, one point one eight percent to close at seventeen thousand nine twenty three and the S&P lower by sixty five points point nine five percent to fifty six ninety five. As Jason mentioned, three point seven percent gain on oil finished at seventy seven sixty a barrel. Quiet for gold, a dollar eighty pullback at two thousand six sixty six per ounce and a five basis point increase on the ten year to finish at a yield of four point zero three percent. As we're discussing Hurricane Milton as it's intensifying and the shares of the general act is soaring today and even a little bit in the after hours did just the opposite. Jay, we looked at the the insurers and boy old boy Tufti Tufti for those companies all state down ten dollars and twenty two cents five point three six percent loss travelers Dow component of course ten dollar and twenty four percent loss down four point three four Chub thirteen dollar and fifty one cent loss down four point six five and AIG losing two dollars and forty one cents three point one seven percent. So there's the other side of the trade, right? Yeah, it's just these insurers in general just tend to perplex me where you know they make money hand over fist and one thing happens is like we're bankrupt, like what? Right. Right. He's the rates. Right. Like it's you know California obviously they're dealing with with state farm and so I'm just like what? Yeah. You know, it's it's perplexing. It is. Now I agree. How it all works. Yeah. I know. I love a nice little dig into how they're managing their assets and liabilities given that issue. I don't want to be another simple. They just go buy treasuries and corporate bonds and I save stuff and clip coupons and make their five or six percent and then they cry wolf and have to spend some money and then they go to their insurance regulators and say we're we're broke. We can't afford anything and you know we want approval to go raise rates and then they did you get your light nice little in the energy email this afternoon? I did. That was so nice of them. Yeah. I agree. Tell them to raise your rates. I can't. Oh my goodness. Don't give me started. All right. Let's hit some of the big movers today. We did have a bit of a kind of a rollover effect in the major tech names, didn't we? Yeah, we did. I mean, there have been the leaders and they've been lagging over the last couple months, I would say. I mean, utilities was the big knock today. Just given interest rates have moved up, but yeah, consumer discretionary communications in general those more the the Amazons and Metas and consumer discretionary Tesla, right? Elon doing his dancing this weekend, which was just not be any more embarrassing. Like, what do you do? I guess if you're the richest guy who cares, it's just it was pretty funny. I mean, energy and I mean, industrials were only down 20 basis points today. I mean, I think that's something to take away positively wasn't, you know, today didn't feel like a puke of any kind. It just seemed more like a yeah, a little rotation. Maybe if you're going to see folks take money off the table to be protective, this is probably what it will look like given the skew of how people have allocated their portfolio. Well, you know, hit me this weekend as stupid as it sounds, but that's what my brain works. I looked at my wife and I went, Oh my God, we've got four weeks of the election. You know, it's like it's a snuck up, you know, it's like, and so, you know, where I, you know, I know you are. We're having discussions without our clients. A lot of people are very nervous and, you know, wanting to get defensive. So if our clients are representative of others that are out there, then that may be the other factor too. The closer we get and the tighter this race is, people are going, you know, let me pull somebody off the table. It's been a good year. And that's why Vic stays bid, right? It's the 30 day implied volatility of the S and P and you just said it right there. Got an election coming up right around that timeframe. And then the tomfoolery before it and, like I said, you know, Georgia and some of those states counting with, you know, an abacus or whatever they're going to be using to tally votes. Odds are we're not going to find out on election night as to who won, but we'll drag it out just for excitement's case. Yeah. Absolutely. All right. We've mentioned a couple of times so far on the show. We had those downgrades. Just kind of set the tone today. Apple and Amazon. Remember, both of those are Dow components. So they did pressure the Dow. Apple lost $5 and 11 cents, 2.3%, 2.2, 2.169. Amazon gave up 3%, $5 and 63 cents to 180, 88, Meadows, Jason alluded to down $11 and 6 cents, 1.9% declined to 584, 88, Broadcom, about 56 pullback at 175.08. Tesla was down about $8 and 54 cents, 2.4, 154. Nvidia was a standout though. Notice that? Doctors did not miss a beat today right now, including the after hours up $3 and 21 cents. 2.55% gained to 128, 11. So it was interesting. Another one that I thought was-- Semi's right. Okay. Yeah. Is that again? I said semi's broadly acted, okay. Yeah. Yeah. Yeah. Yeah. Yeah. That's a very good surprise. One that kind of piqued my interest this morning. You know, I didn't get a chance to talk about it. Win resorts. Now, the stock did not move all that much, finished up about 85 cents, a little less on 1% to 106.31, but they got the first gaming license in the United Arab Emirates. Yes. Think about that for a second. Think about that for a second. Think about the amount of money over there, and I don't know what their culture is like as far as-- Exactly. That's the toughest part is I don't spread that answer exactly. And also, remember, wins gone parabolic over the last two weeks because of China too. I mean, this thing's at a 90 RSI right now. It only goes to 100 and you very rarely see 90. So it's incredibly overbought. So it needs to digest a bit of that happiness before you can price in any Middle East changes. But yeah, I do not know the culture well enough to tell you whether they're gamblers or not. Right. All right. Exactly. I had a bit of this rise in interest. In the home builders, we had-- they kind of started-- it would negative note in regards to the home builders. KB Homes got to downgrade this morning that-- you meet a little else even before Rachel started to move up, really started affecting them. Stock finished down about $2.17, 2.65% loss to $79.60, Lenard just down $0.28. But actually, now I'm seeing that we're up-- we're finished up about $0.52 on Diorhorton and total up about $0.11 so again, including a little bit of after hours. So a little recovery there. And then finally, I can't talk oil and all this without talking Chevron. It's not continuing to move higher. Just a winter day after day after day, divests themselves with some properties. Stock finished up about $0.38 to $1.50, $1.13. What are the charts showing on the oil side of things at this point? I think this would be a good lesson for everybody because again, I don't see anything at this particular near term that could bring the price of oil down. Again, it's going to hang in there in these higher prices in reference to waiting for Israel to do something. And then when Israel does do something, here it's going to come again another wave of prices rising. So how are we looking on the technical side of things? Yeah, you've got a couple, I'd say, resistance levels at $0.78, $0.80, even up as high as $0.83 before you break out into the higher spots. But I think the quick money's been made, just given how, I mean, oils move $10 probably looking at crude over the last three or weeks or so. But yeah, you'll bump into some resistance here pretty soon. And remember, there was a lot of OPEC conversations around bringing back supply and Saudi not worried about $100 oil anymore and even talking about $50 something and they're still profitable. They're doing what they can to jawbone the price down, but I think this has got hurricane exposure. Remember, US being a major producer now, too. And clearly the Israel Hamas situation are sort of a double win for the crude bulls right now. Right. Right. Yep. Fill up your curves. I keep saying every stock update in the morning when these prices move. Go fill up, go fill up, go fill up. Because, like I said, not a lot of reason for the price to come down at this particular time. All right, you small business owners, we got some last minute tax saving strategies for you. Again, don't think just because you have a big tax liability, you can't reduce it because you can. You've got until October the 15th. We're going to show you how it tell you how when we come back, let us turn it over to Greg Neff. He's got news traffic and weather. Hey, Greg. Welcome back to the John Sanchez show on his stock 780 KOH with Jason Gump. We finished down $3.99 on the Dow, the Nasdaq lost $2.13 or $2.14, excuse me, and the S&B lower by $65. All right. Let's met with your accountant, your small business owner. You just met with your accountant. He or she hands over your tax liability and you go, oh my gosh, what do I do? Well, a good accountant will say there's a solution. But Jason, don't you find that many times these accountants, for some reason, I don't know what it is. I'm not bashing on accountants by any means. They do a great job, but very few recommend what you and I are going to talk about. Do you agree? Do you want to cross that as much? I would agree. Yeah, I don't hear. But again, not bashing accountants by any stretch. If you're a good one, you must be slammed, because the number of people who are looking for good accountants, not just TurboTax people that don't add much more value than what TurboTax can, are hard to find. And I think that's the part that the number of clients that ask us for recommendations, even though they have one, is continuing to grow. Right, exactly. So what we're going to help you with to lower this last-minute tax liability is what is called a simplified employee pension, better known as a SEP, and that's of course how we will refer to it. A SEP is one of the very few tax strategies you, as a small business owner, can utilize prior to filing your federal tax return. And that is the key phrase, prior to filing your federal tax return. Because unlike on an individual side where you pretty much have to have everything done by December 31st, as far as your expenses and all the things that you want to do to lower your tax liability, then of course you have until April 15th to fund your IRA account. A SEP IRA is again the only one that I know of that will allow you to fund it up until the date you file your federal return, again, one more time I'm going to repeat this. This is only for business owners, up until the time you file your federal return all the way up to this upcoming October 15th extension deadline. So what Jason and I are going to do is highlight what the heck is a SEP because, again, we get frustrated because we are usually the ones that will recommend them to our clients and we're like, why didn't your accountant, this is what we're talking about, why didn't your accountant recommend this to you sometime other than, you know, here at the last minute, because they are, as you're going to learn, extremely simple to set up, extremely simple to operate, very, very low cost, but very powerful because they allow you to put away pre-tax money. So as we're going to get into it, I'm just going to hit this real quick just to give you an idea of what we're going to share with you, essentially your contribution limits are 25% of your net income, and then there's a few other calculations. So let's say you net it out whatever, 15%, well, if you owe it 100 grand, if you just picked up your tax return, you owe it 100 grand to the IRS and your accountant validates because you always want to get it validated with the accountant, they're the ones that run the final numbers, it says, yeah, guess what, you can put 15% into your SEP IRA, guess what, now you've gone from a $100,000 tax liability down to an $85,000 tax liability. That 15,000 that you just saved, that's going into your retirement account. And so that's really in a net show how powerful these are, it's like I said, it's a large contribution amount, and again, it's your retirement money, tax deferred growth, taxable when it comes out like a 401K is, they don't have, you know, I don't know why they don't have this, just go to my mouth, why they don't have a Roth SEP IRA, would that be something? Yeah, I mean, probably because the key desire is to reduce your taxable income and a Roth doesn't look to it. Same with a 401K, you know, that's the desire there, but they came up with a Roth 401K. And also, right, we tend to allocate, have a few SEPs when they're husband and wife, or, you know, very small, because it's all contributed by the employer. There's no employee contribution. So remember, you're maxed at 25% of the employee's compensation or $69,000 for 2024. And so those are some of the constraints, but very much like you'd said, it's a way to reduce your taxable income that then makes it so you owe less in taxes, but also allows you to use that for your own retirement that, I mean, far too many, and you've stressed this so many times, you know, small businesses are, you know, saving for themselves. They tend to be giving their heart and soul to their employees and not spending them a time and enough time sort of trying to save for themselves, and this is a great way to do it. Absolutely. All right. We're going to start hand some specifics for you. So listen closely. A SEP IRA is available to any size business. Now Jason hit something and I want to drill down on this. These are designed, if you really want to maximize them, meaning being able to put away money for yourself, but, and I hate to say this for your employees, but minimize the amount that you put away for your employees, the SEP is not the plan for you. It is designed for the single business owner or husband and wife, right? If you have employees, Jason and I do not like the SEP IRA because as we'll go on, touch on here in a moment, it can get very expensive because again, you're putting away 25 percent. So you got an employee that's, you know, making a hundred thousand bucks. You're putting $25,000 away for them. And as you're going to learn also, they are immediately vested. There's no vesting schedule like a 401k, where you go, okay, yeah, I'm going to give you this $25,000 bonus, but guess what? It's going to vest, you know, 20 percent a year over the next five years, not with a month, whatever you give your employees, they can turn around and leave you the next day. So very expensive from that. That's why, again, if you are a single entrepreneur, again, it doesn't matter if you're, whatever your business structure, sole proprietor, LLC, S-Corp, C-corporate, it doesn't matter. But just do it if you're by yourself or you in a spouse, okay? So available to any size business, really simple to establish it. Now you establish a SEP through a financial institution like ours, your banks, et cetera, they all do it. We file what's called a Form 5305 SEP, that's the IRS tax number, or a form number. It's a SEP prototype. Really simple, it's not like we created, it's an IRS form. We fill it out, and then as you'll learn also, you get some obligation, you get to turn around and give a copy if you do have employees, et cetera. It really is that simple. It's no different, then opening a regular brokerage account. I mean, it's really that simple. One more form, that SEP form, that's pretty much it. Exactly, no filing requirements for the employer. Now this is one thing, of course, when you have a 401(k), I'm gonna give you some contrast as we go through this. Remember, you have some ongoing annual obligations, you have to file what's called a Form 5500, a top heavy test, and so on and so forth. So you have some obligatory things you have to do when you have a 401(k). A SEP, you don't, because this money, also as you're gonna learn, is being the employee is managing it themselves. You're not choosing anything. Unlike a 401(k), you're not saying, "Okay, here are the 15 different mutual funds to select from." No, all you're doing is opening this SEP with a financial institution under the name of that employee. Again, if you're gonna go with employees on this one, and guess what? Your hands are clean from that point. So there's no fiduciary responsibility that you have, it all relies upon, in our case, us, right? It is the financial advisors. We are the one with the fiduciary responsibility to design a retirement plan, allocation, risk tolerance, et cetera, of those investments. So no filing requirement by the employer. Only the employer contributes to the SEP. This is another misconception. Your employee, unlike a 401(k), cannot put their own money in. It is purely you, the business owner's contributions that go in there, and again, I'm gonna emphasize this one more time. The employee is always 100% vested into the SEP IRA. All right, Jay. So let's just wrap that point up. The pros and cons, easy to set up and operate, low admin costs, flexible contributions. This is another point we should mention. Completely discretionary. You have a good year. You want to put money away for your employees. You can do it. Bad year. You don't have to. And then employers must contribute equally. So this is another misconception people have. You, the business owner, you're looking out for yourself, you go, "Hey, I want to do the full 25%, but I don't even want to give Fred, you know, he didn't do that much for me this year at 10%. Nope. You got to give Fred 25%. So that's also another big misconception people have. Yeah, I think you nailed it there, too, with that ability to allocate to the SEP when you want to. And it doesn't necessarily mean, have to mean, "I had good year. We do it. I had bad year. We don't." It could be the opposite. You can just decide, "Hey, we had a good year. I still don't want to do it for whatever reason. You're not tied into having to do it every year, whereas a 401(k), if you have an active 401(k), and we do those as well." And they're much cheaper than people think. But I think we're talking about the SEP tonight, because a 401(k), you're not going to set up in a week. It has more lifting to it. It doesn't take years, but it takes several months. I mean, you can't do the year to look back. Exactly. And then the SEP, like as John mentioned, you have all the way out until your tax filing deadline to allocate to it. But yeah, the discretionary aspect of your contributions is very important as well. All right. Let's, you know, these forums are better in ideal. Let's walk through the setup of the SEP. Let's kind of go through how easy it is to do it. Yeah. I mean, the 5305 is very simple. It just says like who the owner is, what the structure is, how often you plan to contribute, but it doesn't tie you in any way, shape, or form, and a social security number. I mean, it's that simple. And then it's just new account applications that highlight all the relevant information as far as the individuals that are involved, each of them is opening their own account with all the know your client information. But it's really it. And if you're working with an advisor, they can help you build out what the risk-based allocation is or what the goals are, so on and so forth. And then you as the employer, we're able to hopefully put a decent amount of money into your retirement account and also reduce the tax issues or the tax implications for the company here at year end. One other point on that side, Jason, and that is a lot of times people think, oh, I can double dip. All right. I work in nine to five, so I've got a 401k through my employer, but maybe I got a side gig. Right. And I'm going to open this up and I'm going to max that out. No, you can't do that. You can't, you still have to reach the contribution limit, so don't think you can double dip there. Use the business under the last thing. What do you have to give your employee? Perfect. It's really simple. Notice that you've adopted the SEP, the requirement for receiving the allocation, and again, the basis on which the employer's contributions will be allocated. It's really that simple. It really is. All right. We come back from this break. We'll get into some more details as far as the participation because you can set up some pretty nice rules. If you do have employees, you know, how long do they have to work for you, etc. So you can set up some pretty nice rules for that if you want to exclude some, and then a few more very important points on setting up the SEP for that last minute, tax savings for the entrepreneur. Let's wrap it up with Kristen Snow. She's in the right nut traffic center. Hey, Kristen. It's the John Sanchez Show on his Doc 780K, which as a reminder, if you missed any of our shows, Jason and I have got a great library of podcasts built for you. Just go to your favorite podcast distributor and search for the John Sanchez Show. We're on iTunes, Spotify, etc. All right. We're helping you business owners with some last minute tax tips again. You've got October 15th as your final deadline if you filed an extension. Now, we want to hit some very important points as time quickly is approaching here to in the program. We're going to start with who can participate in a SEP plan. Like I said, and I want to mention it again at the beginning of the show, and Jason said, these are designed ultimately for the small business owner, the single person or the husband and wife. They are very expensive if you have employees as you will find out here in just a moment. Now, you can set up some criteria, but here is the most restrictive criteria if you are going to fund your SEP for the employee. The employee has to have restaged 21. They had to have worked for you in three out of the last five years, received at least $750 in comp for last year and $650 in comp for this year and last year and $650 in comp for 2021, 2022, etc. Again, the employer, you can use less restrictive participation. I've seen this happen many times, Jason, where employers are, for whatever reason, very generous to the employee. And I'm like, "Hey, you know what, I know I told you you had to work for me three out of the last five years, but boy, you've been a great employee, so you've only been with me a year, but I'm going to fund your SEP for you. You have every right to do that. You just can't be more restrictive than what I just mentioned." And then, ones that you have to exclude, employees that are covered by a union agreement, whose retirement benefits were bargained for and good faith by the employee's union and employer and non-resident alien employees. All right, let's come on down to the compensation side. We touched on this real quickly, Jay, let's spend a little bit of time here on how we get these things funded. Yeah, I mean, again, like we talked about, you're limited to 25% of income or $69,000 for the year. But in most cases, you're cutting a check to whoever the custodian is for the product and you're getting $10.99 or $54.98 information on contributions or withdrawals each year from the custodian. So it's pretty simple. They can be funded through any sort of check and it's all employer contribution or a automatic withdrawal or anything along those lines. It feels very much like your typical IRA product, much less like a 401(k), given all the scrutiny that a 401(k) can have. Not that it is difficult, but it's just got more sort of, I would say, checks and balances around it just given all the top heavy and 5500 rules that a 401(k) would have. But very simple, as long as they're in at the appropriate time, like we're talking about, you can code them for a current year contribution or prior. That's right. And for you, the self-employed individual gets a little bit more complicated. You're still limited to the 69,000s, but it's based on your first 345,000 a comp, but then they add in a little bit more calculation, again, it's the, you have to back out one half of your self-employment tax and the contribution to this step. So a little bit of a formula that your accountant can do. And one final, very positive thing that we want to tell you about also, unlike regular contributions to a traditional IRA, guess what, your set contributions? You can make those over age 72 and so on and so forth. So you, again, no limit on it, like a regular IRA. So you got some, some age benefits to you there under that side of things. All right. It was fast and furious. If we have, or if you have any questions by all means, please just give us a call. We'll walk through it or talk to your accountant, but please, please get it done, another retirement source. Great job, Jay. We'll see you tomorrow, everybody. God bless. This program was sponsored by Sanchez Wealth Management. The material in this program was intended as general information only and should not be taken as specific investment tax or legal advice. None of the information on this broadcast was intended to be a solicitation for the purchase or sale of any security. Further information is available by contacting john@sanchezwealthmanagement.com or 775-800-1801. John Sanchez offers securities and advisory services through independent financial group LLC, a registered broker, dealer and investment advisor. Over FINRA SIPC securities offered only in states, John Sanchez is registered in Sanchez Wealth Management LLC and independent financial group LLC are unaffiliated entities. 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