Roth IRAs can serve as a useful supplement to other types of retirement plans for self employed individuals, and are one of the best of the self employed retirement tips with which such men and women should become familiar. These plans can be put in place alongside other self employed retirement packages. Though funds dedicated to Roth IRAs are nondeductible, they build earnings free of taxes, and will not be subject to any tax when withdrawn. Contributions are limited to $5,000 for individual taxpayers and $10,000 for couples, subject to healthy income phaseout levels. The spousal deductible IRA is another option, and it permits any spouse who makes contributions to their employer’s retirement plan to receive an additional $5,000 contribution from their spouse, as long as their combined adjusted gross income does not exceed $167,000.
The last in the series of self employed retirement tips that should be considered is that of the solo 401(k). In this type of plan, a self employed individual may allocate an amount up to 100% of the initial $16,500 earned via self employment endeavors, as or as a compensated employee of his or her own company. Those 50 and over may contribute up to 100% of the first $22,000 so earned. On top of that, amounts of up to 25% of their income earned in either manner may be allocated to the plan and used as deductions. These plans need to be in place by December 31 in order to qualify for the tax advantages.
Any entrepreneur knows how important it is to grasp every facet of their business in order for it to thrive. All too frequently, however, their focus is trained on the present, not the future, and retirement planning falls by the wayside. However, by becoming aware of the many self employed retirement tips discussed above, self employed individuals can gain a heightened awareness of tax strategies that can help plan a stable, secure future.