Retirement Plans for Solo Entrepreneurs
Saving for retirement is even more important for solo-entrepreneurs because you don't have a company sponsored pension plan or matching 401K contributions to rely on.
There are many retirement plans available to self employed individuals and small businesses.
Which one is right for you?
Here is just a sample of the retirement plans available to solo-preneurs and small businesses:
Roth IRA ? although this is not just for solo-preneurs, this is the first place you should look to save if you are just starting to save for retirement (or resuming to save after starting a business).
Roth IRAs are low-cost, very flexible, and allow you to grow money tax-free as long as you follow the distribution rules.
Contributions can be made up to $4,000, and can be withdrawn at any time without tax or penalty (earnings withdrawn may be subject to penalty and tax if withdrawn before age 59 ? and certain other conditions are not met).
SEP IRA ? if you're maxing out your Roth IRA, and are ready to save more, a SEP IRA allows you to save up to 25% of your compensation (20% of your self-employment income) for a maximum of $44,000 per year.
Contributions are tax-deductible, and SEP IRAs have low maintenance fees.
Contributions can be made for employees also, but employees cannot contribute to their own SEP IRA.
This is a good choice if you just have a handful of employees and are looking for a low-cost way to save for your own and your employees' retirement.
Simple IRA ? a Simple plan offers many of the benefits of a 401K, but with less IRS reporting requirements.
You can contribute up to $10,000 to a Simple IRA, with an employer match of up to 3%.
Contributions are tax-deductible, and Simple IRAs also enjoy low annual fees.
Employees are allowed to contribute to Simple plans, and a company match is mandatory.
If you have a lower salary (or self-employment income) in your small business, a Simple IRA allows you to put more away towards your retirement than other plans.
Solo 401K ? for small businesses with no employees, the solo-401K allows you to put the maximum amount away, with less cost and less reporting requirements than a traditional 401K.
Similar to a SEP IRA, contributions max out at $44,000.
However, unlike a SEP IRA, participants in a Solo-401K can contribute up to 100% of the first $15,000 of compensation or self-employment income, and an additional amount up to 25% of your compensation.
This is important because it allows you to save substantially more than a SEP IRA, if your compensation is less than $220,000 per year.
A solo-401K is not appropriate for small business with employees or expecting to add employees.
There's no one best plan for all small businesses.
The best plan for you will depend on many factors, such as whether you have employees or not, how much you want to contribute each year, how much time you want to spend administering the plan, etc.
To get more information about small business retirement plans, contact a no-load mutual fund company, a discount brokerage company or a fee-only financial planner.
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Kristine offers financial and tax planning on an hourly, fee-only basis.
To sign up for free financial planning tips, worksheets, checklists and more, visit http://www.beacon-advisor.com
The Four Stages of an IRA
Copyright 2006 Damon Clifford
With all these different names and terms being thrown around in the financial community, it can get very confusing on what something is, and what it is not.
How many times has it happened to you?
Let me go through and explain the four stages of an IRA.
Stage 1 ? Regular IRA
Everyone knows what the traditional IRA is.
It is what most of us have our money in.
We call up Fidelity, Charles Schwab, or Merrill Lynch and give them our money.
With this IRA, they make the investment choices for you.
They charge you for this, as they are managing your money.
It could be either fee based or commission based depending on the custodian you chose.
Stage 2 ? "self directed" IRA
Stage 2 takes it a little step further.
You still have your money with Fidelity, Charles Schwab, or Merrill Lynch but they allow you to make the decisions.
...
Ira > The Four Stages of an IRA
Could a Roth IRA be Better Than a 401(k)?
Very few people whom I know are familiar with the benefits of the Roth IRA. It was named for the late Senator William Roth of Rhode Island, who proposed it. It is similar to a traditional IRA except contributions are never tax-deductible. Contributions to traditional IRAs are sometimes deductible or partially deductible, depending on your income and whether or not you have a retirement plan like a 401(k) at work. With Roth IRAs, individuals are limited to incomes of $95,000 ($150,000 for couples) to be eligible for full contribution amounts.
However, unlike the traditional IRA, you can withdraw your contributions from a Roth IRA at any time, at any age without penalty. Earnings are not taxed if you wait until at least age 59 1/2 to begin withdrawing them and have held your Roth IRA for at least five years. With a Roth IRA, the contributions are taxed without any deferment, but they grow tax-free and the gains are never taxed (see above). With a 401(k), contributions are tax-deferred,...
Could a Roth IRA be Better Than a 401(k)?
Ira > Could a Roth IRA be Better Than a 401(k)?
Non-Deductible IRA Contributions are Under Utilized by High Income Earners
(ContentDesk) February 1, 2006 -- As they rapidly approach retirement age, many savers find that they need to save more than the maximum annual 401k contribution.
Many of these individuals would like to contribute more money to tax deferred investment accounts, but have been told they are ineligible to contribute to an IRA for one of the following reasons:1. They are an active participant in an employer sponsored retirement plan (pension plan, 401k, SEP, or SIMPLE) 2. Although not covered by an employer plan, a spouse is, and joint income exceeds $160,000.The good news for savers with a little more money to sock away is that almost any individual is entitled to contribute up to $4000 per year to a traditional IRA.
Regardless of income.
Regardless of whether or not they are covered by an employer plan.
Of course, with the IRS there is always a catch.
You cant take a deduction for your contributions if you are over the specified income limits.
Ira > Non-Deductible IRA Contributions are Under Utilized by High Income Earners
The Four Stages of an IRA
Copyright 2006 Damon Clifford
With all these different names and terms being thrown around in the financial community, it can get very confusing on what something is, and what it is not.
How many times has it happened to you?
Let me go through and explain the four stages of an IRA.
Stage 1 ? Regular IRA
Everyone knows what the traditional IRA is.
It is what most of us have our money in.
We call up Fidelity, Charles Schwab, or Merrill Lynch and give them our money.
With this IRA, they make the investment choices for you.
They charge you for this, as they are managing your money.
It could be either fee based or commission based depending on the custodian you chose.
Stage 2 ? "self directed" IRA
Stage 2 takes it a little step further.
You still have your money with Fidelity, Charles Schwab, or Merrill Lynch but they allow you to make the decisions.
...
Ira > The Four Stages of an IRA
How to Stretch Your IRA Tax-FREE
(ContentDesk) May 24, 2004 -- Income taxes are a great inhibitor to building wealth. I've talked about the power of stretching an IRA across multiple generations and how it can build tremendous wealth. Now, I'll show you how it can be done income tax-free.Last week I shared a little-known secret of how to legally turn an investment of $3500 per year into millions and millions of dollars. No, it wasn't by winning the lottery! It was through the power of ?stretching' an IRA. If you missed it you have to read it under the article archive at www.guardingyourwealth.com.
(Mr. Voudrie responds to questions from readers on an almost daily basis.
If you would like clear straightforward unbiased answers to your financial questions, contact e-mail protected from spam bots)Most people think that when they inherit an IRA that they have to take all the money out and pay taxes on it right away. But the IRS...
Ira > How to Stretch Your IRA Tax-FREE
Ira Retirement Plans for Solo Entrepreneurs skirt
Before You Buy A Car: Follow These Steps
Do Your Homework Before You Shop
Before you do any shopping at all ? before you even think about visiting a dealership ? you should determine the following:
How many miles you drive per year.
How long you plan to keep the car you're about to buy.
What you plan to use the car for (family, commuting, long trips, hauling things, etc.)
How much you can afford to pay per month for the car.
You may be thinking...
Ira > Before You Buy A Car: Follow These Steps
Ira Retirement Plans for Solo Entrepreneurs
SEND.COM Unveils Enhancements to its Gift Network Search Engine
PRINCETON, N.J.(ContentDesk)November 18 2003--Send.com, an online gift infrastructure business, is pleased to announce the launch of its enhanced network-search engine. The new search tool allows users to quickly and easily search more than 80 category-specific gift sites in the Send.com network."Our enhanced search tool makes shopping online with Send.com even easier," said Ranjan Wijesinghe, founder of Send.com. "Shoppers can find the perfect gift by simply entering the product name or descriptive...
baskets
Ira > SEND.COM Unveils Enhancements to its Gift Network Search Engine