By Financial Advisor Katie Bensel | Updated on January 25, 2023
Self-employed individuals are in a unique position when saving for retirement. Instead of being limited to the retirement plan options offered by their employers, self-employed individuals take that decision into their own hands. Before making this decision, it is important to understand the characteristics, benefits, and limitations of each plan option before deciding which route is best for you.
*All contribution limits and rates in the above table are based on 2023 IRS tax rules.
While contribution limits are an essential difference between the three self-employment retirement plan options, they should not be the only consideration. Ease of set up and operation, flexibility, and reporting requirements are just a few of the key variables to these plans that should be acknowledged and considered prior to decision making. Each self-employed individual is unique in their needs and capacity to take on additional responsibilities, like annual reporting.
Retirement plan options are not one-size-fits-all, so it is important to weigh all your options and make an informed decision based on your individual goals and needs. If you are self-employed and want to learn more, please contact a One Day In July advisor.
For more information, please visit the IRS website for each account type:
SEP IRA - https://www.irs.gov/retirement-plans/plan-sponsor/simplified-employee-pension-plan-sep
SIMPLE IRA - https://www.irs.gov/retirement-plans/plan-sponsor/simple-ira-plan
Solo 401(k) - https://www.irs.gov/retirement-plans/one-participant-401k-plans
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