A type of traditional IRA called a SEP IRA is perfect for small business owners and self-employed people. SEP stands for a simplified employee pension plan where a business owner with just one employee or more can start saving for retirement. Contributions are tax deductible for those that earn freelance income as well as business owners. A contribution can be made by the business owner, but the employees with the SEP IRA cannot contribute themselves. It is much like a traditional IRA in that the money isn’t taxable until it is withdrawn. One of the main advantages of a SEP IRA is that the contribution limit is elevated in comparison to a ROTH or traditional IRA. As of 2016, a business owner could contribute 25% of an income or up to $53,000, an acceptable contribution being which one is the less.
SEP IRAs Are Perfect for Single Business Owners
If your business is a one-person show then a SEP IRA is the perfect retirement option for you. When you work closely with IRA specialists they can assist you in opening an IRA account with them so you end up paying no or low annual account fees. The formula is simple when it comes to contributions and will be thoroughly outlined for you so you understand the entire concept. That’s why working with the professionals is a wise idea, they can also help you keep the pace where inflation is concerned.
Small Business Owners Can Give Great Benefits to Their Employees
A SEP IRA is especially appealing to small business because it is an inexpensive and easy way to contribute to their employee’s future. Since it is also tax deductible it’s a wise business choice that helps both parties. This type of IRA is also very flexible so you can decide not to contribute you aren’t penalized for having a tough financial year. If you’ve had a successful year, then you can plan on contributing more. Either way, you’ll be able to fully understand your options when you use the services offered by IRA specialists.