From NIL to Nest Egg: Smart Retirement Moves for Student-Athletes

Collegiate athletes with NIL (Name, Image and Likeness) and revenue-sharing income have unique tax-favored retirement planning opportunities. The strategies differ slightly depending on whether the athlete operates under a Schedule C (sole proprietorship) or an S corporation structure, but both can offer powerful ways to build long-term wealth and lower taxable income each year.

Retirement Strategies: Schedule C vs. S Corp

Schedule C (Sole Proprietorship)

• Athletes report income on Schedule C and pay self-employment tax on net earnings over $400
• They qualify for retirement options such as a Solo 401(k) or SEP IRA, potentially allowing up to $69,000 in total contributions (2024/2025 limits, including employee and employer portions)
• Roth IRAs are also available if below income phaseout levels (modified adjusted gross income must be less than $165,000 if single, or $246,000 if married filing jointly). Contributions are after-tax but provide future tax-free growth.
• Solo 401(k)s are particularly attractive — allowing large contributions and deductible amounts — because the athlete is both employer and employee

S Corp Structure

• S corp status allows NIL earners with significant income (often advisable above $100,000/year) to pay themselves a reasonable salary and take remaining profits as distributions, which are not subject to employment tax
• The owner-employee can make both employee (salary-based deferrals) and employer (profit-based) contributions to a Solo 401(k), allowing for maximum annual retirement savings up to overall IRS limits
• S corps require payroll setup and compliance, but the FICA and self-employment tax savings can be considerable

Top Retirement Plan Options

Solo 401(k)

• Available to both Schedule C and S corp filers with no employees other than the owner (and possibly a spouse)
• Maximum contributions (2024/25): $23,000 employee elective deferral + employer contribution up to $46,000, capped at 100% of earned income (total $69,000)
• Allows for Roth contributions (taxed now, tax-free withdrawals) or traditional (deductible contributions, taxed at retirement)

SEP IRA

• Easier administration, but only employer contributions allowed — up to 25% of net earnings or $69,000, whichever is less

Roth IRA

• Not a business plan, but available if earned income meets certain thresholds. Up to $7,000 can be contributed after-tax (2025 limits).
• Especially attractive for young athletes expecting higher future tax rates

Key Tax and Planning Considerations

• Retirement contributions directly lower taxable income (traditional plans) or provide tax-free growth/withdrawals (Roth versions), a huge long-term win for high-earning athletes
• S corp owners can minimize employment taxes by balancing salary/distributions but must observe reasonable compensation rules
• A Solo 401(k) often offers the most flexibility and highest contribution caps, making it the core strategy for most high-income athletes

Key Takeaways for Collegiate Athletes

A disciplined, tax-smart retirement plan — anchored by a Solo 401(k) or SEP IRA and supplemented with a Roth IRA — can provide college athletes with NIL and revenue-sharing income a powerful foundation for long-term wealth. Choosing the right business structure, understanding tax implications, and maximizing every allowable deduction and contribution are essential steps for future financial security. Collaborating with a qualified tax advisor ensures athletes fully leverage their opportunities and stay compliant as rules evolve.

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