s/o Small Business Owner & Taxes, Retirement, and Savings

[Anonymous]

Recently I found myself reading through the posts about the small business owner who's sitting on a lot of cash, and I am in similar situation. Last year I brought in a respectable $200,000, which is more than the $120K I made the last few years. Like the other OP, I find some comfort in holding liquid funds because I don't know if I'll be able to keep earning the same money with my business, plus my spouse brings in around $70K annually. I think (irrationally?) that stocks are overvalued right now, but most of my 401k is stocks.

This means that I have a 2023 big tax bill because my quarterly estimates were based on prior year earnings. So far I've put $30,000 into my solo 401k for 2023 (employee max plus employer match). I also max a Roth account but only started it a few years ago.

Other info:
- I am 41 and married with a 7-year old.
- Combined we have about $600-$650K in our retirement accounts, which I know is not a lot. The daycare years were lean and my spouse is not a high earner.
- We have about $35,000 in a 529 for the kid.
- $90K is in CDs/HYSA and another $90K in I-bonds and T-Bills. This is our emergency fund plus extra savings.
- Another $60K is in a taxable brokerage account.
- Our PITI is $1800/month and our only other debt is a small amount of student loans ($14K that we've been making minimum payments on). We have decent equity in our home.
- - No expected inheritances or family help. Health insurance is through spouse's job.

My questions for you financial gurus:
- Should I throw a bunch of cash as employer match into my solo 401k to bring down my 2023 tax bill? As it stands now, it looks like I'll owe $15,000+ to the feds, which makes my stomach hurt. If I throw $10K - $20K (or more??) into my retirement account, I won't owe as much.
- On the flip side, if I wind up earning more in 2024, should I start focusing on 2024 tax year retirement?
- Do I have too much cash? Or is it wise to keep a large reserve fund for a rainy day, since my earnings are volatile?
- At what point do I stop hoarding cash at 5.__% and put more in the market?

[Anonymous]

Throwing more into the 401k is a no brainer…what is your reluctance there? I mean, not doing that is just increasing your tax bill

You are relatively young…you just have to trust that the market will be much higher 20 years from now and exceed the 5% return.

You can just buy the S&P through IVV or buy something like VYM which is only mega cap stocks that pay a dividend higher than the S&P…believe it is at a 3% yield and you get the market returns