The stories are common: Boxer makes big bucks during his career. His career ends. Then, in some situations, he’s left with nothing. In bad situations, he’s left with less than nothing. In really bad situations, he’s in bad health and left with less than nothing.
So. . . Let’s say I’m a boxer, and I realize that my career will have a much earlier retirement age than non-sports-related professions. I’m hoping to sock away some money for “real” retirement (when I don’t need to have Wal-Mart pay me to sign autographs for an afternoon, for example). I know that I could just not spend much money, and have it in “regular” [taxable, that is] account(s), but what kind of tax-deferred accounts could I put it in, and how much?
If you incorporate and do your boxing contracts via your corporation (with you as employee of the corporation) you can do a 401k plan. The limits are 16,500 in elective deferrals and profit-sharing distributions of up to 49,000 (or 25% of profit). That’s a total of 65,500.
If that’s not enough, it is possible to set up a defined-benefit plan via the corporation (essentially, a traditional pension). These have a lot more rules, but can permit much higher contributions. I refer this work out to a third-party administrator, but the examples scenarios in their sales materials use contributions of $190k, $245k, $225k and $233k.
If you don’t incorporate, a SEP or SIMPLE will allow contributions of up to $49,000.
(All numbers are per year).