The IRS offers a handful of options but understand that all of these require the assistance of a qualified agent.
They’re sometimes referred to as “one-participant 401(k) plans” (though your spouse can also participate). And since you’re both the employer and employee, you’re allowed to make contributions as both.
These solo plans work similarly to employer-provided 401(k) plans; they have comparable rules and requirements. And they’re complicated. For example, you can make elective deferrals of up to 100 percent of your earned income until you hit the annual contribution limit of $18,000 in 2016 (or $24,000 if you’re age 50 or older).
Simplified Employee Pension Plan (SEP)
If you’ve ever worked for another company as an employee, you may already be familiar with this concept. SEPs are traditional IRAs (“SEP-IRAs”) that employers can set up for employees; they can also contribute to them. They’re bound by the same rules for investment, distribution, and rollover as traditional IRAs.
Here, too, you can make contributions as both employer and employee. And like one-participant 401(k)s, the calculations required are daunting.
Traditional IRAs and Roth IRAs
These options are of course available to self-employed individuals. Each has its own tax implications, and they’re not as difficult to understand and implement as SEP IRAs and one-participant 401(k) plans. If you’ve never explored these retirement vehicles, you can get more information here.
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