Other retirement vehicles that may be researched and compared through the use of self employed retirement calculators are Roth and spousal deductible IRAs. These plans are frequently used to supplement other types of retirement packages. Funds contributed to Roth IRAs are nondeductible, but their earnings grow tax free, and no taxes are levied when the funds are withdrawn. The cap for individual contributions is $5,000 per annum, $10,000 for couples. The income phaseout levels are high enough so as not to negatively impact most taxpayers. The spousal deductible IRA lets an individual contribute an extra $5,000 when their spouse contributes to their employer’s retirement plan, so long as the couple’s adjusted gross income is not greater than $167,000.
Potential contribution levels for those choosing the popular solo 401(k) can be researched with the help of widely available self employed retirement calculators. This type of plan offers the ability to contribute and deduct up to 100% of a self employed individual’s first $16,500 in income or the same level of contribution by one receiving compensation as an employee of his or her own company. Individuals over the age of 50 are allowed to contribute up to 100% of their first $22,000 in eligible income. On top of that, amounts up to 25% of income earned in these ways may be contributed and deducted. Self employed retirement calculators can be a great help in assessing how this type of plan stacks up to the others in an individual case. These plans must be put into place by the taxpayer prior to December 31.
Entrepreneurs and those who long to be their own boss are well aware of the hard work, expertise and dedication required to grow a successful business. It is all too common, however, that the demands of self employment place retirement planning on the backburner. With the aid of some basic information on various retirement vehicles and the use of self employed retirement calculators, it is possible for even the most single-minded business owner to engage in the long range planning necessary for future financial security.