Self-Employed Retirement Plans

With so much to do already running a small business, the self-employed shouldn’t have to worry about their retirement plans.  Here are a few plans you should consider:

SEP IRA – The Simplified Employee Pension (SEP) is a plan funded by the employer.  The number of employees you have does not matter with a SEP IRA.  This is an inexpensive plan to start and administer.  It has higher contribution limits than a SIMPLE IRA and is very flexible since contributions can vary from year to year.  You must contribute the same amount to your employees as you do for yourself.  Although, there is no catch-up contributions and you cannot take a loan.  This is best for businesses with few (if any employees).

SIMPLE IRA – The Savings Incentive Match Plan for Employees (SIMPLE) is a tax-deferred retirement savings plan for small businesses that the employer must contribute to.  This is another plan that is easy to start and administer.  Contributions are low compared to other plans and participants cannot borrow against the plan.  Again, this is suited for very small businesses who don’t want to contribute a lot and don’t need to take out loans.

Solo 401k – This is like your traditional 401k you can get at a big company, but can only be used by the business owner and his or her spouse.  You can choose a Roth (funded with already-taxed income) or a traditional (funded with pre-tax income) plan.  This is a very flexible option with higher contribution limits.  You may take a loan out if needs be.  This option is a bit more costly and more difficult to open and administer.  This is the best option for a sole proprietor.

If you’re self-employed, it’s best to talk to an expert when setting up your retirement plan.  Contact one of our tax experts at 1.800.IRA.0646 or visit our website at

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