The Best Retirement Plans for the Self-Employed

Posted by: Rod Kurtz on January 22, 2008

These days, there is a retirement plan to fit nearly anyone’s lifestyle. Just consider a few basicsethe amount of disposable cash available to fund your plan annually, your age, the number of years before retirement, and whether you have employees.

Check with your financial adviser or tax professional to see if one of these popular plans for the self-employed might work for you:

•Individual IRA. These accounts are easy to set up, but limit annual contributions. Individual IRAs are best for those who are able to contribute no more than a few thousand dollars each year.

•Roth IRA. The Roth is an after-tax IRA. Like the Individual IRA, it is a low-maintenance and low-contribution option. With a Roth, an individual may be required to phase out contributions as income level increases.

•Simple IRA. For employers who want to offer a retirement benefit to their employees, as well as themselves, the Simple IRA is a good place to start. Designed to allow employers to contribute to an employee’s account, this plan allows greater yearly contribution potential. Employers may find it more costly, however, as it requires contributions for all eligible employees.

•SEP-IRA. This plan allows higher maximum contributions than the previously mentioned plans and is fully funded by available business funds. Like the Simple IRA, it requires eligible employees receive the same base contribution as the business owners.

•Individual 401(k). An excellent way to maximize the amount contributed toward retirement, this plan is limited to businesses in which the owner and spouse are the only employees. As in traditional 401(k) plans, the owner can borrow from the fund. However, it can cost more in administrative fees.

•Keogh. Expensive, requiring high levels of administration and the filing of an annual report with the IRS. On the other hand, the plan may be desirable for individuals who seek to make contributions of considerably large amounts to a retirement plan.

Gene Fairbrother
ShopTalk 800® Business Consultant
National Association for the Self-Employed
Dallas

Reader Comments

Lawrence Gary

August 11, 2008 11:15 PM

Bet that doesn't beat my plan. You spend a lot of time talking about everything but return on investment.
May I ask you (pause)..............If I could show you how to create a TAX FREE INCOME for life (pause)a tax free income that you could never out live (pause)..............with no stock market risk....NONE....would you take 15 minutes to take a look at it?

I posted this because you are fellow NASE. You should seriously touch base with me.

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