Secure your financial future with these retirement tips for personal trainers.
As a personal trainer, you're building a business that depends on your physical ability to perform. That's why retirement planning isn't just about saving money—it's about creating tax-advantaged wealth that can replace your income when you're ready to step back. The question is: SEP-IRA or Solo 401(k)?
Many doctors get a late start to saving for retirement because we spend so many years in training before their first attending jobs—and the same applies to fitness professionals who often start their careers later after exploring other paths.
The Personal Trainer Retirement Challenge:
A SEP-IRA (Simplified Employee Pension) is the easiest retirement plan for self-employed personal trainers to implement and maintain.
SEP-IRA Key Features:
How SEP-IRA Contributions Work: Only employers can make contributions to a SEP IRA account. Even if the contributor is a self-employed individual, they can only contribute in their capacity as an employer or business owner.
For self-employed trainers, your "compensation" is your net self-employment income minus half of your self-employment tax. This effectively limits your contribution to about 20% of your gross income.
SEP-IRA Example:
Depending on the income, solo 401(k) plans can offer bigger tax deductions and greater annual contribution limits than SEP IRAs. A Solo 401(k) allows you to contribute as both employee and employer.
Solo 401(k) Key Features:
Solo 401(k) Contribution Strategy:
Solo 401(k) Example (Same $80,000 Income):
Scenario 1: New Trainer ($35,000 income)
Scenario 2: Established Trainer ($65,000 income)
Scenario 3: High-Earning Trainer ($120,000 income)
SEP IRAs also count against you for a Backdoor Roth IRA because of the violation of the pro rata rule, whereas a solo 401k will allow you to do both.
If you're a high-earning trainer who also wants to do Backdoor Roth IRA conversions, the Solo 401(k) is your only option. SEP-IRA contributions will complicate the Backdoor Roth strategy due to the pro-rata rule.
Variable Income Management:
Equipment Purchases vs. Retirement:
S-Corp Integration: If you elect S-Corp status, your reasonable salary becomes the basis for retirement plan contributions. This can actually increase your contribution capacity compared to sole proprietorship.
SEP-IRA Setup (1-2 weeks):
Solo 401(k) Setup (2-4 weeks):
If you want to have that additional tax advantaged option, having to navigate the Pro Rata rule (now and in future years) can be a huge disadvantage to using a SEP IRA.
Choose SEP-IRA if:
Choose Solo 401(k) if:
Both plans require proper setup and ongoing compliance. The tax benefits are substantial—up to $15,000+ in annual tax savings for high earners—but the implementation must be correct to avoid penalties.
Critical Success Factors:
Ready to start building tax-advantaged retirement wealth? Our tax reduction planning services help personal trainers implement the optimal retirement strategy while maximizing current-year tax savings. We handle the complex calculations and ensure perfect compliance so you can focus on building your fitness business. Call us today to get started.