Making the decision to become self-employed is a very big deal. Being in business for yourself means that you are now completely in charge of your earnings, your time and your financial future. If you've been wondering how difficult it is for a self-employed person to find a retirement plan, you need not worry. Retirement planning for the self-employed individual is easier than it's ever been. With a wide range of plans and Individual Retirement Accounts (IRAs) to help you prepare for retirement, with a little bit of research, you can find all the resources you need to get you set up right away on a good retirement plan.
The main retirement plans available for the self-employed are the SEP IRA, the SIMPLE IRA, the Self-Employed 401(k) AND the SOLO 401(k). There is also the Roth IRA which has tax-free benefits. All plans have different rules and contribution requirements, but due to the variety of plans available, it makes it easier to find a plan that suits your needs. The SEP (Simplified Employee Pension) and SIMPLE (Savings Incentive Match Plan for Employees) are great retirement plans to have if you run a small business. If you're just starting out with your business and you're not yet making much, this is a great starting point. You are not required to have employees for either plan but if you do decide to take on a worker, you will be required to match your contribution payments up to a predetermined percentage.
The Self-Employed 401(k) may require a little more work to set up, but it usually include significant tax deductions and will allow you to contribute larger amounts. With this pan you cannot have any employees and it is restricted to just you and you and spouse. With the Solo 401(k) you are given added flexibility because you contribution amounts can vary each year, if you find that you are earning more or less. Like the Self-Employed 401(k), it does also allow you to contribute larger amounts and it is also restricted to you the business owner and your spouse. The Roth IRA, although not a typical retirement plan, it is a great savings plan where your investment grows tax-free and you have the option of withdrawing money without being penalized.
With the wide selection of retirements you have to choose from, you do not have to have to be without a decent retirement plan. There is also the option of contributing to more than one self-employed retirement plan, which can provide you with even more flexibility and maximize your earnings. Even with fluctuating income, there are options available to you, so the key is to start now, so that you reap even more benefits in the long run. And don't forget to consult a financial planner to help you fully benefit from your retirement plans. Here's to a bright and happy future!
