Retirement Plans

SEP vs. Simple IRA vs. 401k vs. Roth 401k

Retirement plans for small business

One of the most significant benefits of being self-employed is that more and better retirement options are available to you than most others. For example, while most people qualify for individual retirement accounts (IRA), you'll find that you have three additional options:

  1. Simplified Employee Pension (SERP IRA)

  2. Savings incentive match plan for employees (Simple IRA), and

  3. Individual or solo 401(k)

So which one should you use, how much can you save, and what are the differences between them? With a SEP IRA, you can save up to $58,000 per year. However, the SEP carries a 25% penalty for early withdrawal. A Solo 401(k) plan can accept both employer and employee contributions to save up to $58,000. There are other rules for the 401(k) to consider.

If you own a small business and would like to set up a retirement plan for your company, we are happy to provide you with guidance and open your accounts for you. We work with Charles Schwab to create your account and help you administer the filings. Click here to see more information from Charles Schwab.