Self Employment Retirement Plans

Written by Retirement Writer on September 11th, 2008

For those who work for a company of any real size, there is always the question of what type of retirement packages do they offer. However, when a person is self-employed, there are many more questions, like where do I start? Of all the various types of Self Employment Retirement Plans out there, here is one you might look into.

First of all, there is the Solo 401(k) plan. Much like the plan found in most major businesses and companies, this one is designed for the self-employed individual. This is not something you should look into if you have employees under you. This is for the person who runs their own business by themselves, and can add either their spouse or their business partner.

With this option, you can defer up to $15,500 for the year (2008). You can also make a profit sharing contribution of up to 25% of your income, as long as you don’t exceed $46,000. The best part is that you don’t have to fill out any discrimination tests. However, should your contributions exceed $100,000, you will have to fill out a Form 5500.

The down side to this Self Employment Retirement Plan is that the plan must be established by the end of the fiscal year in order to make any contributions to the plan. Also, with this plan being for self-employed individuals and their spouses and/or partners, all profit sharing contributions must be of equal amounts.