Retirement Plans for the Self-Employed Dangle Tax Benefits

This week, Craig Siminski, of CMS Retirement Income Planning, shares an article showing how Solo 401(k) plans and SEP IRAs may help small-business owners and the self-employed shelter more income from taxes and save for the future:

As a business owner, you may devote most of your time, energy, and profits to running and growing your business.

But working for yourself means that saving money for retirement is also entirely up to you.

This is not the only reason it may be worthwhile to divert a sizable chunk of your earnings into a tax-deferred retirement account. Doing so generally reduces your current taxable income.

Here are two types of retirement plans that are relatively simple for small-business owners and self-employed individuals to set up:

Solo 401(k)

A solo 401(k) is a one-participant plan for business owners who have no other employees. Tax-deductible (or pre-tax) contributions to an individual 401(k) can be made in two ways.

As the employee, you can contribute as much as 100% of your annual compensation, up to the $19,500 annual maximum in 2020, or $26,000 if you …

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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 21 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.

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