Retirement plans for self employed
                     Financial Advisors, Planners and Consultants 
in Kennesaw, GA
https://www.activefinancialgroup.com/
Retirement plans for self employed
1. Traditional or Roth IRA:
Best for: Those just starting out or saving less than 
$6,000 a year. If you are leaving a job to start a 
business, you can also roll your old 401(k) into an 
IRA.
IRA contribution limit: Up to $6,000 in 2020, plus a 
$1,000 catch-up contribution for those 50 or older.
Tax advantage: Tax deduction on contributions to a 
traditional IRA; no immediate deduction for Roth 
IRA, but withdrawals in retirement are tax-free.
Employee element: None. These are individual 
plans. If you have employees, they can set up and 
contribute to their own IRAs.
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Retirement plans for self employed
2. Solo 401(k)
Best for: A business owner or self-employed person 
with no employees (except a spouse, if applicable).
Contribution limit: Up to $57,000 in 2020 (plus a 
$6,000 catch-up contribution for those 50 or older) or 
100% of earned income, whichever is less. To help 
understand the contribution limits here, it helps to 
pretend you’re two people: An employer (of yourself) 
and an employee (also of yourself).
In your capacity as the employee, you can contribute as 
you would to a standard employer- offered 401(k), 
with salary deferrals of up to 100% of your 
compensation or $19,500 (plus that $6,000 catch-up 
contribution, if eligible), whichever is less.
In your capacity as the employer, you can make an 
additional contribution of up to 25% of compensation.
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Retirement plans for self employed
3. SEP IRA
Best for: Self-employed people or small-business 
owners with no or few employees.
Contribution limit: The lesser of $57,000 in 2020 
($56,000 in 2019) or up to 25% of compensation or net 
self-employment earnings, with a $285,000 limit on 
compensation that can be used to factor the 
contribution. Again, net self-employment income is net 
profit less half of your self-employment taxes paid and 
your SEP contribution. No catch-up contribution.
Tax advantage: You can deduct the lesser of your 
contributions or 25% of net self-employment earnings 
or compensation — limited to that $285,000 cap per 
employee in 2020 — on your tax return. Distributions 
in retirement are taxed as income. There is no Roth 
version of a SEP IRA.
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Retirement plans for self employed
3. SEP IRA
There is a special rule for sole 
proprietors and single-member LLCs: 
You can contribute 25% of net self-
employment income, which is your 
net profit less half your self-
employment tax and the plan 
contributions you made for yourself.
The limit on compensation that can 
be used to factor your contribution is 
$285,000 in 2020.
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Retirement plans for self employed
4. SIMPLE IRA
Best for: Larger businesses, with up to 100 
employees.
Contribution limit: Up to $13,500 in 2020 or 
$13,000 for 2019 (plus catch-up contribution of 
$3,000 if 50 or older). If you also contribute to an 
employer plan, the total of all contributions can’t 
exceed $19,500.
Tax advantage: Contributions are deductible, but 
distributions in retirement are taxed. 
Contributions made to employee accounts are 
deductible as a business expense.
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Retirement plans for self employed
4. SIMPLE IRA
Employee element: Unlike the SEP IRA, the 
contribution burden isn’t solely on you: 
Employees can contribute through salary 
deferral. But employers are generally required to 
make either matching contributions to employee 
accounts of up to 3% of employee compensation, 
or fixed contributions of 2% to every eligible 
employee. Choosing the latter means the 
employee does not have to contribute to earn 
your contribution. The compensation limit for 
factoring contributions is $285,000 in 2020.
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Retirement plans for self employed
5. Defined benefit plan
Best for: A self-employed person with no 
employees who has a high income and wants to 
save a lot for retirement on an ongoing basis.
Contribution limit: Calculated based on the 
benefit you’ll receive at retirement, your age and 
expected investment returns.
Tax advantage: Contributions are generally tax 
deductible, and distributions in retirement are 
taxed as income. An actuary must figure your 
deduction limit, which adds an administrative 
layer.
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                          Active  Financial  Group
        Website:https://www..activefinancialgroup..com/
Office  One
Address::  1300  Riidenour  Bllvd,,  NW  Suiite  221  Kennesaw,,  GA  30152
Emaiill::  [email protected]
Phone  No::    (678)  574-0080
                                                                                                                    Office  Two
Address::  2207  Spalldiing  Driive,,  Atllanta,,  GA  30350
Emaiill::  [email protected]
Phone  No::  (770)  797-5788
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