Investing Advice

Retirement Plans for Small Business and Sole Proprietors

What do the self-employed do for retirement plans?

Many sole proprietors find that the $3,000 per year limitation of IRA’s to be way too low for what they wish to save in tax-free or tax-deferred retirement accounts.

The Keogh plans that allowed the self-employed to establish a profit-sharing plan, used to be a good deal, allowing contributions of up to 15% of earnings along with a money-purchase pension plan allowing an additional 10%, for a total tax-deferred savings of 25%. If you already have one, kill it, but make sure you terminate it properly. You can roll the proceeds over into another retirement plan.

SEP-IRA’s and SIMPLE plans, as of 2002, allow the self-employed to set aside as much as 31% of their income tax-deferred. A business owner earning $100,000 could stash close to $31,000 in his or her retirement plan and take a tax deduction for the whole thing.

On top of that, they give you the ability to borrow money from your own plan. It's not the best move in the world, but not the worst either, since you end up paying interest to yourself. There's no minimum required contribution, either, so if you have a tight-money year, you can contribute less or nothing at all.

Other Retirement Planning Topics:

  1. Retirement Planning
  2. IRA’s (Individual Retirement Account) – Traditional IRA
  3. Roth IRA – Taking Money Out
  4. Employer Sponsored Retirement Plans
  5. Retirement Plans - Continued
  6. 401K Savings
  7. Notes for 403(b) Plan Participants
  8. Senior citizens retirement resources
  9. Retirement Plans for Small Business and Sole Proprietors
  10. Simplified Employee Pension (SEP) IRAs
  11. SIMPLE (Savings Incentive Match Plan for Employees) IRA
  12. Your own 401(k) for the self-employed
  13. Employer Retirement Plan Vesting and Contribution
  14. Forgotten Retirement Benefits
  15. Other thoughts about retirement accounts
  16. Other thoughts about your retirement needs

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Who's Not Investing?

Millions marry and start families each year without taking basic steps to make sure their future, as well as their children's, is financially secure.

According to a recent survey by Princeton University and the Consumer Federation of America, 70% of households with incomes under $50,000 a year have retirement savings of less than $5,000. This same report said "most Americans are living paycheck to paycheck".

Learn more about how you can plan, save and invest smart for your family's future.

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