Self Employed Retirement Plans

SelfEmployedRetirementPlans.info is designed to provide retirement plan information to the self employed in 3 simple steps.

Step 1 - What are my self employed retirement plan options?

Self employed business owners frequently select from 4 self employed retirement plans.

• Individual 401k
• SEP IRA
• Defined Benefit Plan
• Simple IRA

Step 2 - Which self employed retirement plan is right for me?

Selecting the right retirement plan for your needs is primarily dependent on your income and on the amount of your desired annual retirement contribution. Each plan benefits a business owner differently based on their income and depending on how much they would like to contribute each year.

For many successful business owners the decision usually comes down to either a SEP IRA or Individual 401k due to the high contribution limits and flexible annual contributions. Individual 401k plans have greater administrative responsibilities than a SEP, but may allow a larger annual contribution at identical income levels due to the way the annual contributions are calculated.

Defined benefit plans may be a good choice for business owners age 45 or older who would like to make retirement contributions in excess of the limits of an individual 401k or SEP. Depending on the age and income of the business owner annual contributions to a defined benefit plan can exceed $100,000. Defined benefit plans are complicated and they require the services of an actuary to calculate the annual contributions and as a result they are the most expensive administratively. For business owners in a financial position to take advantage of the high contribution levels in a defined benefit plan, the administrative expense may seem minimal relative to the tax savings.

A Simple IRA is easy to setup and low administrative responsibilities, but has lower annual contribution limits so they may be a good choice for business owners with relatively lower incomes.

Another issue to consider is would you like to have the option of borrowing against your retirement plan by taking a loan. Of these self employed retirement plans only individual 401k plans and defined benefit plans are permitted by IRS rules to have a loan provision.

Step 3 - How do I get more specific information about these self employed retirement plans?

The Individual 401k, SEP IRA, Defined Benefit plan and Simple IRA each have their advantages and disadvantages. Learn more about the key benefits and specific features of these self employed retirement plans.

   Need Help or Advice?  |  Open a New Account

Disclosures:

*  The information on this page is for informational purposes only and does not constitute, and should not be construed as, professional, legal or tax advice. To determine your individual tax situation and specific needs, please consult a professional tax advisor.

* Information contained in these sections merely highlight some benefits. There are risks involved with all investments that could include tax penalties and risk/loss of principal.