Monday, May 25, 2015

4 Types of Small Business Plans for Self Directed IRA Accounts

Self directed IRA accounts work great for those who want to make their own financial decisions, but what about individuals who are self employed or own small businesses? Where do they turn when it comes time to think about retirement plans?
Most of businesses aren't big enough to qualify for a large retirement plan. So the IRS has constructed several small business retirement plans for these people to take advantage of. When it comes to retirement age, many self employed and small business owners could be left with a meager social security check that would not meet the needs of the lifestyle that they are accustomed to living.
Fortunately, most reputable self directed IRA custodians also offer plans such as SEP, SIMPLE, Solo 401(k), and Roth Solo 401(k).

Simplified Employee Plan (SEP)
The SEP is a retirement plan meant for self-employed individuals and small business owners. Typically, the small business has less than 25 employees. This plan offers the individual a retirement account that doesn't require complicated qualified plans such as a conventional IRA or 401(k). Advantages include:
• All contributions are tax deductible and compound with tax-deferred savings until the time of withdrawal.
• The employer may contribute up to 25% of the employee's wages with a maximum of $49,000 each year.
Savings Incentive Match Plan for Employees (SIMPLE)
If you own a business with less than 100 employees and do not have any other type of qualified plan available, the SIMPLE is something to look into. With this plan, you and your spouse can make contributions if you make $45,000 or less per year. Advantages include:
• Tax deductible investments compounded with tax-deferment until the time of withdrawal.
• Employee contributions up to $11,500 for those under the age of 50.
• Employee contributions up to $14,000 for those over the age of 50.
• Employers match dollar for dollar up to 3% of the employee's compensation.
Solo 401(k)
Think of this plan as a combination of the SIMPLE and the SEP. Basically, a sole proprietorship is offered a qualified plan that allows larger contributions and larger deductions. Advantages include:
• You don't have to be incorporated to qualify. This includes sole proprietors, partnerships and corporations, too.
• Contributions can reach $16,500 annually if you are under the age of 50.
• Contributions can reach $22,000 annually if you are over the age of 50.
• 0-25% of your profit sharing may be included, too.
Roth Solo 401(k)
The Roth works the same as the Solo 401(k), but you also have the added tax benefits of a Roth IRA. Contribution levels remain the same, but taxes are paid before they are put into the retirement. Additional advantages include:
• If your income limits exceed qualification levels for a Roth IRA, you may be able to consider the Roth Solo 401(k) as an option.
There is a Retirement Plan for Everyone
If you thought that you would never be able to participate in a qualified plan, and you were starting to look at other investment opportunities, you still have some other options. Generally, a retirement plan will offer compound interest through tax deductions and tax deferment that other types of investments aren't able to offer.
If you are looking into the different types of self directed IRA accounts that you may qualify for, you may want to consider one of these four options.
Established in 1974, Equity Trust is a leading self-directed IRA custodian. We specialize in the custody of alternative assets in self-directed IRAs, CESAs, HSAs and qualified business retirement plans. Visit our free e-library for more information at http://www.TrustETC.com.
Article Source: http://EzineArticles.com/?expert=Edwin_Kelly

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