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)
- Designed for employers with no full time employees
- Defer up to $19,500 from compensation in 2021
- Defer an additional $6,500 if 50 years or older
- Company can contribute 25% of compensation
- Maximum combined contribution between employee and company is $58,000
- Contributions are tax deductible
- Annual IRS filing requirement
Simple IRA
- Plan is easy/inexpensive to administer
- Allows employees to share in the cost of funding their accounts
- Defer up to $13,500 from compensation in 2021
- Defer an additional $3,000 if 50 years or older
- Employer is required to contribute to employees SIMPLE IRA
- Dollar-for-dollar matching contributions up to 3% of the employee's compensation
- Nonelective contributions of 2% of the employee's compensation
- Employer matches can be made anytime during the year and are tax deductible
- No annual IRS filing requirement
SEP IRA
- Plan is easy/inexpensive to administer
- Company is making contributions not employee
- Maximum contribution is lesser of 25% of compensation or $58,000
- Must contribute same percentage to each employee
- Contributions are tax deductible for employers
- No annual IRS filing requirement