What Are the Best Self-Employed Retirement Plans?

Updated : Aug 26, 2019 in Articles

What Are the Best Self-Employed Retirement Plans?


We often get the question asking us, “what’s
the best retirement plan if I’m self-employed?” Well, that’s hard to say. There’s lots of plans out there, and the best
one depends on your situation, right? Do you have employees or is it just you? How old are your employees? What are their salaries? So just to simplify, I’m just going to assume
that – one person, self-employed, maybe their spouse is involved in the business, but that’s
it, no employees. in that case, you might want to look into
something called a solo 401(k) or an individual 401(k). It’s really simple to set up, not really a
lot of cost to maintain, but it gives you a great amount of flexibility. As a self-employed person you’re the employee
and the employer. And with a solo 401(k), you can make an employee
contribution, as well as a profit sharing or a matching contribution on behalf of the
business – again, because you’re also the employer. It’s straightforward, like I said, easy to
set up, and gives you a pretty large amount of flexibility. If we’re talking about larger plans, and something
that’s going to give you an even greater tax benefit, you might want to look into something
called a defined benefit plan. This is a little bit more costly to establish. There are some filing requirements, there
are minimum annual funding requirements, but if you’re making a fair amount of money and
you’re looking to put away really large sums of money, a defined benefit plan can be the
way to go. You can put hundreds of thousands of dollars
a year away into a plan like this. You could also pair that with a solo 401(k)
to give yourself even greater flexibility. So like I said, while there’s not one end
all be all plan that’s perfect or the right one, it’s going to depend on your actual situation. But if you need additional information, figuring
out what might be appropriate for you, contact us at PureFinancial.com.

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