Unlock Massive Wealth: The Ultimate Guide to Retirement Plans for the Self-Employed

Navigating the retirement planning landscape as a freelancer, self-employed business owner, or independent professional can feel daunting.

Unlike the luxury of employer-sponsored plans, you're steering the ship alone. Yet, the pathway can be simpler than you imagine.

For those entrepreneurial spirits who have branched out with a small team, there are also options to extend retirement benefits to your staff.

Let's unpack the top five retirement accounts tailored for the self-employed and determine which one aligns best with your aspirations.

Quick Snapshot: Top Retirement Plans for Self-Employment Individuals

Traditional/Roth IRA:

• Contribution Limit: $6,500 Annually (+$1,000 Catch-Up)
• Matching Contributions for Employees: No
• Investment Types: Stocks, bonds, and mutual funds
• Plan Administrator: Brokerage

Self-Directed IRA:

• Contribution Limit: $6,500 Annually (+$1,000 Catch-Up)
• Matching Contributions for Employees: No
• Investment Types: Alternative Assets (e.g., Real estate, gold, loans)
• Plan Administrator: Custodian

SEP IRA:

• Contribution Limit: 20% of net income (see: net profit from IRS Schedule C reduced by the deductible self-employment tax) up to $330,000 annually (2023)
• Matching Contributions for Employees: 25% of net earnings up to $66,000 annually (2023)
• Investment Types: Stocks, bonds, and mutual funds
• Plan Administrator: Brokerage

SIMPLE IRA:

• Contribution Limit: $15,500 (2023)
• Matching Contributions for Employees: Dollar-for-dollar up to 3% of employee compensation
• Investment Types: Stocks, bonds, and mutual funds
• Plan Administrator: Brokerage

Solo 401(k):

• Contribution Limit: $66,000 ($7,500 catch-up rate)
• Matching Contributions for Employees: No
• Investment Types: Alternative Assets (e.g., Real estate, gold, loans)
• Plan Administrator: Brokerage or Plan Trustee

And here's some more information for you on the benefits of each of these plans.

Traditional/Roth IRA: These are the standard-bearers for independent professionals. Traditional IRAs leverage your pre-tax dollars for investments, deferring the tax blow until withdrawal.

On the other hand, Roth IRAs use after-tax dollars, giving you tax-free withdrawals and a haven from capital gains.

Self-Directed IRA (SDIRA): An upgrade from the conventional IRA, the SDIRA grants you more investment freedom.

Think beyond the stock market and delve into realms like cryptocurrencies, startups, or real estate. This account amplifies potential returns and diversification but demands more vigilance and can carry higher fees.

SEP IRA: Tailored for high-earning self-employed professionals and small businesses, this plan provides a streamlined way to set aside substantial retirement funds.

A notable perk: no mandatory annual contributions. Flexibility is its middle name.

SIMPLE IRA: Ideal for small businesses, it offers an effortless way to both invest in your future and incentivize your team.

With contribution matches and decent caps, it's a popular choice among growing ventures.

Solo 401(k): A gem for sole proprietors, this plan offers impressive contribution limits and can be crafted as either a Traditional or Roth account. However, it's limited to business owners without a staff.

When it comes to selecting the right plan, evaluate your current financial situation, future earning potential, and retirement goals.

Those just beginning might lean towards Traditional or Roth IRAs. Seasoned professionals or high earners might explore the advanced features of SDIRAs, SEP IRAs, or Solo 401(k)s.

Embarking on your retirement journey as a self-employed individual is an empowering endeavor. With a little research and some financial advice, you can lay the foundation for a comfortable future while enjoying tax benefits today.

Here are the most frequent questions my team at Horizon Trust Company hears weekly from self-employed individuals:

Can I invest in both a Roth IRA and a business-centric retirement plan?

Absolutely. However, Roth IRA contributions might have income limitations.

Why pick a Solo 401(k) over other plans?

It offers flexibility, higher contribution caps, and both employee and employer contribution options.

Do self-employed retirement plans offer tax perks?

Certainly! Many contributions are tax-deductible, potentially reducing your annual taxable income.

Can I adjust contributions with business income fluctuations?

Yes, most plans offer the agility to tailor contributions based on yearly business income.

Want to learn more? Check out the weekly flow of educational SDIRA content at Horizon Trust.

Also, check out my free seminar. I will show you the secrets of investing with a Self-Directed IRA and how to maximize tax benefits, including by starting an LLC.?

I will also show you the secrets the rich use to avoid taxes and the mindset they use to manage their money.?

Best of all, it’s all free and available at the link below.?

Free SDIRA Webinar

Sign up and learn how to maximize your wealth for retirement using dormant money in your IRA.

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