Being self-employed has a lot of advantages. You have control over your business or job; can choose how many hours you work, what to work on or even work from the comfort of your own home. Another advantage is that self-employed individuals have retirement plan options that are suitable for their small businesses. Among these plans, a SEP-IRA is the most popular.
A SEP IRA is pretty much similar to a traditional IRA. With that said there are some aspects where a SEP is different, and in some cases better than a traditional IRA.
Can you open an account?
One can open a SEP IRA account if he or she is a proprietor of a small business, has a small number of employees, or is self-employed.
Ease of setup
SEP IRA
An advantage of a SEP IRA is that it is very easy to setup, with a small number of forms and paper work necessary. In many situations, you only need to complete the IRS Model Form 5305- SEP agreement and you are all set.
Contributions
In a SEP IRA, employees do not contribute to the account. Only employers can contribute to their employees’ account, making this retirement plan simple and easy to monitor. The employer can contribute as much as 25% of the employees wages.
Contribution limits
As of 2011, the maximum amount that one can contribute to a SEP IRA is $49,000 or the lesser 25% of net earnings for the self-employed. These high contribution limits are a great help if an account owner wants a fast rate of growth from his investment; the bigger the investment, the faster the potential for an account to grow.
So in choosing a retirement plan that best suits you, consider the SEP IRA in your short list. It is a simple retirement plan that is easy to setup and maintain. Its high contribution limits enable you to make big contributions to your account for a more prosperous retirement in the future. For more financial information you can check out get401krolloverinfo.com