June 2, 2010
In recent years, many options have become available to self-employed individuals to provide for their retirement. Tax planning for retirement can include deductible contributions to a Keogh plan, traditional or Roth IRA, SEP plan, SIMPLE plan or a one-person 401(k) plan. You may wish to consider implementing one of these plans for yourself and/or your employees to benefit from a current tax year deduction and accumulate tax-deferred retirement savings.
Each of these plans has advantages and disadvantages, and some may not be applicable to your situation. For example, a sole-owner 401(k) retirement plan allows a contribution for you as both an employer and as an employee. Therefore, a sole-owner 401(k) plan may provide for the largest deductible contribution. However, a sole-owner 401(k) is not available to the self-employed with employees other than a spouse or relative. As an alternative, a Keogh plan provides more flexibility, but is more complicated to maintain than a SEP or SIMPLE plan and may have additional administrative costs. Ultimately, the choice of savings vehicle will depend on factors related to your business and your retirement needs. Regardless of which plan you qualify for or what your retirement needs are, it is important to begin planning now for your retirement.
We would be happy to discuss the various retirement plan options and how they might apply to your business. Please contact us.
I am self employed can I get a 401 plan
Can I open a 401 wiţh a small amount.t
As a self employed person, yes you do have the option of setting up a single person 401k plan. There are other plans, however, you may want to consider depending on whether or not you have any employees and how much you want to contribute each year.
The minimum amount you are allowed to contribute in order to get a plan started is driven by the account holder. For example, Fidelity, Schwab, etc. may have a minimum amount needed in order to establish the account.