Stylists: Cut Taxes & Build Wealth With These Retirement Plans

Want to Save More? A Financial Expert Shares the Best Retirement Plans for Stylists

Saving for retirement helps secure your future—but the right plan can also help you save money on taxes today.

Below, Anna Manukyan (@amanukyan), Certified Financial Educator and Senior Director of Education and Creative at Ulta Beauty, shares the best tax-friendly retirement options for stylists to help you keep more of what you earn—today and in the future.

Traditional IRA

This is a classic retirement account available to anyone with earned income and easily set up through a brokerage account with financial institutions like Vanguard or Fidelity. 

Benefits:

• Tax Deduction: Contributions may be tax-deductible depending on your income level. For example, if you made $100,000 and contributed $7,000 to your Traditional IRA, you’d only pay taxes on $93,000 for the year. You’ll pay taxes on that $7,000 contribution (and any growth) later, when you withdraw it in retirement.
• Flexible Contribution Limits: You can contribute up to $7,000 (or $8,000 if age 50+).

Considerations:

• Contribution Limits: If you want to invest more than the contribution limit allows per year, you must have multiple retirement plans.

• Required Withdrawals: There are mandatory withdrawals called required minimum distributions (RMD), starting when you turn 73.

Best For:
Salon professionals just starting out with lower incomes or those who have already maxed out contributions to other plans.

Roth IRA

A Roth IRA offers tax-free growth and withdrawals in retirement, making it a fan-favorite tool for long-term savings.

Benefits:

• Tax-Free Withdrawals: Roth IRA contributions are made with money you’ve already paid taxes on, so you won’t owe taxes when you withdraw those funds in retirement—unlike Traditional IRAs, which are taxed later. Even though you don’t get a tax break now, those funds will grow without having to be taxed later. 
• Flexible Contribution Rules: You can withdraw your contributions (but not earnings) any time without penalty.

Considerations:

• Not Tax Deductable: Contributions are not tax-deductible.
• Income Limits Apply: If you’re filing as single and have earned more than $153,000 or $228,000 for married couples, you will no longer be eligible for this account type. 

Best For:

Those who expect to be in a higher tax bracket in retirement and want tax-free withdrawals and those looking for flexible access to their contributions.

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SEP IRA (Simplified Employee Pension Individual Retirement Account)

A SEP IRA is a retirement savings plan with high contribution limits designed for high-earning self-employed individuals and small business owners.

Benefits:

• High Contribution Limits: You can contribute up to 25 percent of your net earnings or $66,000 (whichever is lower).
• Tax Deduction: Contributions are tax-deductible, reducing your taxable income for the year.

Considerations:

• Employer-Funded Only: Contributions must come from the employer (you). If you have employees, you must contribute the same percentage of their salary as you do to your own.
• No Employee Contributions: You can’t make employee contributions—only employer contributions are allowed.

Best For:

Self-employed individuals and small business owners with high earnings who want to maximize tax-deductible retirement contributions.

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