Saving for Retirement Plans is even more important for solo entrepreneurs because you don’t have a company sponsored pension plan or matching 401K contributions to rely on.
There are many retirement plans available to self employed individuals and small businesses. Which one is right for you?
Here is just a sample of the retirement plans available to solo-preneurs and small businesses:
![Retirement Plans for Solo Entrepreneurs](https://www.how2entrepreneurs.com/wp-content/uploads/2023/07/Retirement-Plans-for-Solo-Entrepreneurs-1-1024x683.jpg)
SEP IRA – if you’re maxing out your Roth IRA, and are ready to save more, a SEP IRA allows you to save up to 25% of your compensation (20% of your self-employment income) for a maximum of $44,000 per year. Contributions are tax-deductible, and SEP IRAs have low maintenance fees. Contributions can be made for employees also, but employees cannot contribute to their own SEP IRA. This is a good choice if you just have a handful of employees and are looking for a low-cost way to save for your own and your employees’ retirement.
![Retirement Plans for Solo Entrepreneurs](https://www.how2entrepreneurs.com/wp-content/uploads/2023/07/Retirement-Plans-for-Solo-Entrepreneurs-2-1024x684.jpg)
Solo 401K – for small businesses with no employees, the solo-401K allows you to put the maximum amount away, with less cost and less reporting requirements than a traditional 401K. Similar to a SEP IRA, contributions max out at $44,000. However, unlike a SEP IRA, participants in a Solo-401K can contribute up to 100% of the first $15,000 of compensation or self-employment income, and an additional amount up to 25% of your compensation. This is important because it allows you to save substantially more than a SEP IRA, if your compensation is less than $220,000 per year. A solo-401K is not appropriate for small business with employees or expecting to add employees.
![Retirement Plans for Solo Entrepreneurs](https://www.how2entrepreneurs.com/wp-content/uploads/2023/07/Retirement-Plans-for-Solo-Entrepreneurs-3-1024x683.jpg)