Choosing the Right Retirement Plan

Do I have the right retirement plan?

If you are a small business owner & looking to save more than the $5,000 limit for IRA’s you have three main choices and some other choices you might not be hearing about from your securities representative. A SEP or Simplified Employee Pension is much like a turbo charged IRA. It has higher contribution limits but you must contribute for all employees. The Simple IRA is also a turbo charged IRA. Much like the SEP you have to contribute for yourself and employees. The contribution limit is lower but is not limited by % of income like the SEP so if you have a part time or sideline business with $46,000 of income or less this could be a good fit. The 401k is no longer for large employers. There are now individual 401k’s that allow for Roth contributions that can be good retirement savings plans. A little more expense allows for more flexibility.

If you really need to put a lot of money away for retirement and defer taxes today there is nothing better than a 412i pension plan. Contribution limits are based on age and salary. A 50 year old can be eligible to put away over $250,000 pre-tax. You can also have profit sharing plans or look to build a tax free retirement using permanent life insurance.