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RETIREMENT RESOURCES
3 popular retirement plans
for the self-employed
By: Christian F. Cartwright
f you're self-employed, your primary focus, contribute as much as 25 percent of your net self-
especially in your entrepreneurial effort's early employment earnings up to annual maximum
Iyears, likely is to just make sure your business amounts that are adjusted each year for inflation.
survives. But once you're on stable business footing,
it's wise to look into tax-deferred retirement plan 2. Savings Incentive Match Plan for Employees (SIMPLE)
options for your small business. IRA: A SIMPLE plan provides you and your employees
with a relatively easy way to make retirement
1. Simplified Employee Pension (SEP): One reason that contributions. A SIMPLE IRA has two sources of
SEP plans are popular is that they are easy to set up funding. Employees may choose to make salary
and maintain. You can establish a SEP with a simple reduction contributions to plan instead of receiving
the amounts as part of their regular compensation.
In addition, as the boss, you will contribute either
matching or non-elective amounts to the accounts
of eligible employees. As a self-employed individual,
you can defer all of your net self-employment
earnings or $12,500, whichever is less. The limit is
the same for both 2017 and 2018 tax years.
If you're 50 or older, you can defer an additional
CURRENCY OF
$3,000 for 2017.
3. 401(k) plan: There are more administrative
requirements with a one-participant 401(k) plan,
but that doesn't dissuade many self-employed
people from opening this type of account. The
reason for dealing with more hassles? An owner-only THE FUTURE?
401(k) often allows for a larger contribution than a
SEP or SIMPLE IRA. The self-employed retirement
plan works essentially like traditional workplace
defined contribution plan. However, a single- Some argue it’s bitcoin
participant 401(k) — which also is commonly
one-page form, Form 5305-SEP, Simplified Employee referred to as a solo 401(k), solo-k or uni-k plan —
Pension - Individual Retirement Accounts covers a business owner with no employees, or the
Contribution Agreement. Or, if you prefer, you can owner and his or her spouse who works for the
open a SEP-IRA through a mutual fund, bank or business.
other financial institution. A SEP-IRA operates
essentially like a traditional IRA for tax purposes.
Once created, the administrative responsibilities are
minimal. There are no employer tax filings. You can
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