This is for owner-operators, lease-purchase drivers and one-truck carriers. You are paid on settlement statements rather than a paycheque, nothing is withheld, and the truck is both the business and its largest expense. The fact most owner-operators have never been told: a solo 401(k) lets you contribute as the employee and again as the employer out of the same self-employment income. That is the highest-leverage thing available to a profitable year.
What is actually different about your money
A settlement statement is not a paycheque and it does not behave like one. What arrives is revenue with fuel, insurance, tolls, escrow, trailer or tractor rent, maintenance reserve and whatever else the agreement charges already netted out of it — and with nothing withheld for tax. Net earnings from self-employment carry self-employment tax at 15.3%, being 12.4% for Social Security up to $184,500 of 2026 earnings and 2.9% for Medicare with no ceiling, half of it deductible in figuring adjusted gross income, and quarterly estimated payments are generally required once you expect to owe $1,000 or more. There is a second number underneath all of that which almost nobody has written down for a driver: net earnings from self-employment after the deductible half of the self-employment tax. It is not gross revenue, it is not the settlement total, and it is the figure every retirement contribution you are allowed to make is calculated from.
Then the truck, which is where the interesting decision lives. Federal law now allows a permanent 100% first-year bonus depreciation deduction for qualifying property acquired after 19 January 2025, and § 179 expensing up to $2,560,000 for 2026 with the phase-out beginning at $4,090,000 — limits that are not a constraint at one-truck scale. So a tractor purchase can flatten a year's taxable income by itself. Two things follow that rarely get said in the same conversation. The first is that California does not follow the federal rules: the state's § 179 limit is $25,000 with the phase-out starting at $200,000, and California has not conformed to federal bonus depreciation, so the federal and state pictures separate sharply in a purchase year. The second is the one that matters most. A depreciation deduction shelters income by converting cash into an asset that then keeps depreciating. A retirement plan contribution shelters income by moving it into an account you own. Both reduce taxable income this year. Only one of them is still your money at sixty. Which lever is right in a given year is arithmetic — basis, recapture on sale, the note and its interest, cash flow, the state difference — and that arithmetic belongs to your CPA. We are telling you that the second lever exists, because a great many owner-operators have only ever been shown the first.
Third, classification, which around the San Pedro Bay ports is not a hypothetical. California applies the ABC test under Labor Code § 2775 and the burden of establishing independent-contractor status rests on the hiring entity. Since 2019, Labor Code § 2810.4 has required the Labor Commissioner to publish and maintain a public list of port drayage motor carriers with unsatisfied judgments, tax assessments or liens, and a customer that engages a carrier after it appears on that list can share joint and several liability for wages and unreimbursed expenses owed to drivers. That list is a matter of public record and you can look at it. What none of it tells you is how the test applies to your own lease, your own dispatch arrangement and your own equipment — that is a legal question for employment counsel, and the stakes on it are far larger than anything on this page.
What you are usually sold
The pitch every owner-operator hears is the December one: buy the truck before year end and write it off. It is true as far as it goes, and it goes about half as far as it sounds. The deduction is real; the note, the interest, the insurance and the fact that you now own an asset that loses value every month are also real, and the dealer's job is finished at the signature. Lease-purchase programmes get sold the same way, as the road to ownership. Some drivers do finish them. The terms are where the money is, and they are worth reading with somebody who has no stake in whether you sign.
The other thing sold hard into this trade is a corporate structure — form an entity, take a salary, take the rest as a distribution, save on self-employment tax. There is genuine substance behind it at some income levels, and it is not a scheme. But it has consequences nobody mentions at the point of sale: an S corporation owner's retirement plan contributions are computed on W-2 wages rather than on business profit, so setting the salary too low can quietly cap the very contribution you were trying to make, and reasonable compensation is a requirement rather than a preference. Payroll, filings and a tax preparer who handles entities all cost money every year. Whether the arithmetic works for you is a CPA question, and it should be answered with your numbers rather than with a seminar's.
None of that is illegal and not all of it is wrong. But you are entitled to know how the person recommending it is paid, and to compare. Our standard · our fees, published · the difference between an RIA and a brokerage.
What we do instead
We start by reading a settlement statement with you and working down to the number that actually drives everything — net earnings from self-employment. Then the tax mechanism: a separate account, a percentage moved the day a settlement lands rather than at the end of a quarter, and the four estimated-payment dates in the phone. The safe-harbour rules give a target that does not require forecasting the year correctly, since generally paying 90% of the current year's tax or 100% of what last year's return showed — whichever is smaller — avoids the underpayment penalty, with a different threshold for higher earners. Your CPA sets the percentage; we make it automatic.
Then the double lever, which is the single most useful fact available to a profitable owner-operator. In a solo 401(k) you contribute twice out of one income: as the employee, up to $24,500 for 2026, and again as the employer through a profit-sharing contribution, with total additions to the plan capped at $72,000 for 2026. From the year you turn 50 there is a further $8,000 of catch-up, and $11,250 at ages 60 through 63. A SEP-IRA has only the employer half — the lesser of 25% of compensation or $72,000 — which on ordinary owner-operator income allows materially less. If a spouse genuinely works in the business, they can be covered too, with their own set of limits. Past $250,000 in plan assets there is an annual Form 5500-EZ. The plans, compared honestly.
The part that takes judgment is sequencing the plan against the equipment, and we are deliberate about where that line sits. Your CPA decides how much of a high year's shelter should come from depreciation and how much from a plan contribution, because that is a tax computation and we do not do tax computations. What we do is everything on the plan side: establishing it before the deadline, funding it out of settlements rather than out of whatever is left in December, choosing what it holds, rebalancing it and publishing what we charge to do so. And we will say the thing the equipment conversation never gets to — the truck is not a retirement asset. A trade-in in year eight is a down payment on the next truck, not a pension.
The retirement structures that actually apply to you: Solo 401(k), SEP-IRA, Section 179 / bonus depreciation, quarterly estimated tax. Which of those fits depends on how you are paid and whether anyone else is on your payroll — the plan chooser walks through it, and this guide compares them honestly.
A first conversation, at no cost
Fifteen minutes on the phone. If your question has a short answer you get it on the call, and if we are not the right firm for you we will say so.
Where truckers and owner-operators are in Los Angeles and Orange County
We work across both counties from a principal office in Norwalk. These are the county guides, each naming the cities where this audience actually concentrates:
Our fees, published
No competing advisor page in this area publishes its fees. Here are ours.
| What | Fee |
|---|---|
| Investment management | 1.5% to 2.0% of assets per year; Advisers may set a rate below the standard schedule, as low as 0%, at their discretion — and whatever rate applies to you is disclosed in writing before you engage. Our Form ADV Part 2A, Item 5, states the fee as up to 2.00% of assets per year, subject to negotiation; the firm may waive all or part of it. Generally billed quarterly in arrears |
| Account minimum | No minimum account balance |
| Commissions and product fees | None — we are fee-only |
| Solicitor compensation | May be received or paid under disclosed arrangements |
| Initial conversation | Free, 15 minutes, no obligation |
Complete fee details in our Form ADV Part 2A, Item 5.
Questions
Should I buy a truck this year or put the money into a retirement plan?
Both reduce taxable income, which is why the question is real rather than rhetorical. They differ in what you hold afterwards: depreciation converts cash into equipment that keeps losing value and can generate recapture when you sell it, while a plan contribution converts cash into an account with your name on it. The calculation — basis, recapture, the note and its interest, cash flow, and the fact that California allows only $25,000 of § 179 and no bonus depreciation — is a tax computation and belongs to your CPA. Our part is telling you what the plan side allows, which for 2026 is up to $72,000 of total additions, and then actually building it.
How much can I really put away on owner-operator income?
More than most drivers assume, and the reason is the structure rather than the income. The employee deferral in a solo 401(k) is a flat $24,500 for 2026 regardless of how large the business is, and the employer profit-sharing contribution stacks on top of it, subject to a combined $72,000 limit. Add $8,000 from the year you turn 50, or $11,250 at ages 60 through 63. All of it is computed on net earnings from self-employment after the deductible half of self-employment tax, not on gross revenue, and the self-employed computation is circular enough that your CPA should run the actual number. How the plan works.
I run drayage out of the ports. Where does the classification question stand?
Unresolved as a general matter, and specific to your facts as a particular one. California applies the ABC test under Labor Code § 2775 and the hiring entity carries the burden of establishing contractor status. Separately, Labor Code § 2810.4 requires the Labor Commissioner to publish a list of port drayage motor carriers with unsatisfied judgments, tax assessments or liens, and customers who use a listed carrier can share civil liability for what is owed to drivers. The list is public and updated monthly. It records unsatisfied judgments; it is not a finding about your own arrangement. For that, see employment counsel.
What about per diem for meals on the road?
Individuals subject to Department of Transportation hours-of-service limits may deduct 80% of business meal expenses rather than the usual 50%, and instead of tracking actual costs a transportation-industry taxpayer may use the special M&IE per diem rate, which is $80 a day within the continental United States and $86 outside it for travel on or after 1 October 2025. There is a point about this that nobody makes: per diem is a deduction, so a larger one lowers your net self-employment income, which is the same figure your maximum retirement contribution is computed from. Deducting more can therefore mean being allowed to contribute less. That interaction is worth one conversation with your CPA before the return is filed, not after.
Everyone tells me to set up an S corporation. Should I?
It is a tax and legal structuring question, so the honest answer is that your CPA decides it and we do not. What we can tell you is the piece that touches our side of the work: for an S corporation owner, retirement plan contributions are based on W-2 wages rather than on the business's profit, and reasonable compensation is a requirement. A salary set low enough to minimise payroll tax can also cap the contribution you were hoping to make, so the two decisions have to be made together rather than a year apart. There are also real annual costs — payroll processing, a separate return, a preparer who handles entities.
What does this cost, and is there a minimum?
There is no minimum to open an account. We ask for $50 a month of continuing deposits, because a plan you do not fund is not a plan. Investment management is 1.5% to 2.0% of assets per year, billed quarterly, and it is published on the site — which is more than most firms in this market will tell you before a meeting.
Do I have to have a lot saved already?
No, and that is deliberate. Most firms set a minimum precisely to avoid people at the start of this. We built the opposite: $0 to open, and the same fiduciary standard whether the account is four figures or seven.
¿Atienden en español?
Sí. Atendemos en español, y buena parte de nuestro material existe en español, escrito originalmente, no traducido por máquina.