![]() And with the SEP, “the minute you hire an employee, you must contribute the same amount of money to that employee’s SEP as you’re paying into your own. The 401(k) has a loan option, for instance. Business owners who wish to contribute more than the maximum allowed by a SEP IRA may benefit from establishing a Solo 401k. Self-employed workers who qualify for the Solo 401k receive the same tax benefits as those with a traditional 401k. Disadvantages: Possibly greater administrative fees and responsibilities.Loans are permitted of up to 50% of the total value, with a $50,000 maximum. Advantages: Possibly higher retirement contribution limits at identical income levels.Contribution Limit: 2016 limit is $53,000 ($59,000 if age 50+, thanks to a catch-up provision).This provides business owners with the flexibility to reduce or forego contributions in years when profits are below expectations. You aren’t required to contribute to the plan every year – an attractive feature for businesses that have earnings that vary a lot from one year to the next. As with many other plans, you have until the tax-filing due date of the company, including extensions, to fund the SEP IRA. Disadvantages: A Solo 401k may allow a higher contribution and tax deduction, and it provides the option of a $6,000 catch-up contribution for those 50 years of age and older.Ī SEP IRA is perfect for small businesses such as Uber Drivers, and can be established by any company owner.Advantages: Simple setup, with low administrative charges and responsibilities.IRS regulations do not permit borrowing against a SEP IRA, but a Solo 401k loan of up to half of the account value – with a $50,000 cap – is possible. While Solo 401k plans have higher administrative responsibilities than a SEP, they may allow a larger annual contribution at identical income levels, due to the way the annual contribution is calculated. The SEP IRA and Solo 401k are the two most popular retirement plans for self-employed individuals such as Uber Drivers and small business owners, due to their flexibility and high contribution limits. I can give you a lift and explain you how to start now. You are driving day and night, making good money and NO time to think about how to save for retirement. Retirement Options for Uber Drivers: Start Now!
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