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Three Popular Self-Employed Retirement Savings Plans

Three Popular Self-Employed Retirement Savings Plans

| November 11, 2021
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Just because you’re self-employed doesn’t mean you can’t compete with the big boys that offer company sponsored retirement plans.

 

Solo 401(k)

  1. Designed for employers with no full time employees
  2. Defer up to $19,500 from compensation in 2021
  3. Defer an additional $6,500 if 50 years or older
  4. Company can contribute 25% of compensation
  5. Maximum combined contribution between employee and company is $58,000
  6. Contributions are tax deductible
  7. Annual IRS filing requirement

 

Simple IRA

  1. Plan is easy/inexpensive to administer
  2. Allows employees to share in the cost of funding their accounts
  3. Defer up to $13,500 from compensation in 2021
  4. Defer an additional $3,000 if 50 years or older
  5. Employer is required to contribute to employees SIMPLE IRA
  6. Dollar-for-dollar matching contributions up to 3% of the employee's compensation
  7. Nonelective contributions of 2% of the employee's compensation
  8. Employer matches can be made anytime during the year and are tax deductible
  9. No annual IRS filing requirement

 

SEP IRA

  1. Plan is easy/inexpensive to administer
  2. Company is making contributions not employee
  3. Maximum contribution is lesser of 25% of compensation or $58,000
  4. Must contribute same percentage to each employee
  5. Contributions are tax deductible for employers
  6. No annual IRS filing requirement
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