Self Employed Retirement Plans

Written by Jacey Harmon
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Self employed retirement plans are available in a variety of options. Your business and the amount you want to contribute will determine which of the self employed retirement plans is right for you. Some may consider looking at different self employed retirement plans as a boring, confusing task. I disagree--when you learn what options are available and consider the possible size of your nest egg at retirement, the research becomes easy.

Types of Self Employed Retirement Plans

A Traditional IRA, Roth IRA or SEP IRA are all acceptable options for self employed retirement plans. A Traditional IRA allows for tax-deductible contributions up to $3,000 annually with tax deferred growth. Contributions into a Roth IRA plan are not tax deductible like traditional IRA plans. However, the account grows tax-deferred and withdrawals at retirement age are tax free. A SEP IRA allows for higher contributions than traditional and Roth IRAs, with a maximum of $41,000 annually. Contributions into an SEP IRA are tax deductible.

Keogh plans are defined benefit plans for self employed individuals who own a sole proprietorship, partnership or limited liability company (L.L.C.). There are rules involved with these types of plans; a consultation with a financial advisor will help you decide of a Keogh plan is right for you. A self employed 401K or traditional 401K are types of retirement plans that may be utilized by self employed individuals. 401K plans are highly flexible and have higher contribution limits than most IRA accounts.

It is never too early to start planning for retirement. The earlier you can start, the better off you will be in the long run. You do not have to start a plan with a significant initial investment either. An initial monthly investment as low as $100 can get you started in reaching your goals for retirement.


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