Retirement Plans For the Self Employed: A Quick Guide

March 13th, 2015

One of the first things we learn from our parents when we are young is that it’s important to set aside some money to save for the future. In our youth, retirement can seem far off but it’s important to think of your retirement options as early as you can. For many of us, it can be tough to make this a priority, particularly for those of us who are self-employed. When you’re self employed, simply keeping your career or business afloat is too much to deal with, let alone thinking long term to the future and to your retirement, but it’s of absolutely vital importance that you do. The years pass by quickly, and if you aren’t prepared, know this will be detrimental to your financial future. After all, your money is important to you, and so is your future. It’s good to be armed with information about your options. What are you saving for your retirement? Is it enough? We can help you with that.

What are my options?

You have a couple to choose from here, the first being a Simplified Employee Pension, or SEP. With this option, you can put in up to 25% of your net earnings; up to 53,000 for 2015. This can offer you a lot of flexibility, while being a good simple plan to go with. It’s best for those who have no employees, because if you have any you will be required to put money away for them as well. If you have employees, they cannot contribute in this option. Another important thing to keep in mind with SEP is that your money is not taxable until withdrawal.


Savings Incentive Match Plan for Employees of Small Employers is a traditional IRA suitable for those who are self employed who run small businesses. With this option, employees can make contributions, but employers must then match the contributions up to 3% of their employee’s salary. With the SIMPLE IRA, you can put in all of your net earnings from self employment (up to 12,500 in 2015) and even $3,000 more if you’re over the age of 50. You can set up this plan through a bank or other financial institution anywhere from January 1st through October 1st. For this plan, you must have fewer than 100 employees earning at least $5,000 each.

The Solo 401k Plan

Sometimes known as the “individual” 401(k) plan, this is for self-employed people who have no employees. This option is meant for sole proprietors, although your spouse can contribute if he or she earns income from the business. This plan is similar to traditional 401k plans offered to employees by larger companies. Here, you can put in up to 25% of your net earnings from self employment as well as making salary deferrals up to $18,000 in 2015. If you’re 50 or over, you can also contribute an additional $6,000.

Keeping these options in mind, you can make the transition into a beautiful, secure financial future. We’ll work with you to figure out the best, most creative solution for you. Thinking about retiring if you’re self employed can be just as simple and worry free as if you worked for someone. With these options in mind, you can move forward in a way that’s perfect for you.