Self Employed Retirement Planning
My friend and I usually banter about sports, business, and life in general. Things took an interesting turn yesterday when he bashfully asked me about retirement. My eyes lit up. I’m no expert, but I am proud to say I know a thing or two about 401k’s, IRA’s, and mutual funds. Unfortunately, our situations are drastically different. He runs his own business. Perhaps one day when Buck Inspire really takes off, I can join him. But until then, I’m still working for the man. However, since my friend seemed concerned about the future, I wanted to dig up some information for him.
No Debt MBA sent me a link from the IRS. Why not get it straight from the horse’s mouth? Our favorite government agency breaks down Simplified Employee Pension (SEP), Simple Plans, and Qualified Plans.
In 401(k) Plans For The Small Business Owner goes over requirements, components, and does comparisons of different plans in an easy to understand table. In Self Employed Retirement Plans, the plans are clearly laid out with features, advantages, and disadvantages.
As I cleared my head with all the different terms (some plans are known by several different names), I realized that my friend is the only employee. In Finally a 401(k) plan just for one, there are a collection of stories and examples to help clarify the concepts. Hopefully this will make his decision, and yours, just a little easier.
After getting familiar with your options, you need to take a good look at your situation and see what works best for you. If you want to contribute more than the IRA limit, these plans are very beneficial to you. Be aware of contribution limits, administrative fees, and whether you want to be dealing with tax deferred or after tax contributions.