The 4 Best Self Employed Retirement Options

Self-employed and looking at retirement options? This comprehensive guide will give you the low-down on what's out there and help you make the right choice.

Are you self-employed and looking for retirement account options? With the increasing number of people becoming entrepreneurs, it is important to know your choices are when planning for retirement.

Self employed individuals have a variety of investment accounts that can help them build their nest egg faster than traditional methods. From Traditional IRAs to Roth IRAs, let’s explore some of the best self employed retirement options out there and discover which one may be right for you.

1. Traditional IRA

Self-employed people who want to build their retirement savings might benefit from a Traditional IRA, which offers tax-deferred growth, meaning you don’t pay taxes on the money you contribute until you withdraw it in retirement.

This means your investments can grow faster than if they were subject to taxation every year. Contributions to a traditional IRA can be deducted from taxable income, potentially reducing one’s tax burden.

Certain criteria must be met depending on age and earned income to qualify for a traditional IRA. Generally, those under 70 ½ and making money (from employment or self-employment) can open a traditional IRA and contribute up to $6,500 ($7,500 if over 50).

When it comes time to withdraw funds from your traditional IRA after retirement age (59 ½), taxes will be due at ordinary rates on all withdrawals taken before reaching 59 ½ years old – this includes both earnings and contributions made into the account during its lifetime.

It’s important to note that early withdrawal penalties apply unless special circumstances allow otherwise. These include things like using the funds towards qualified medical expenses or college tuition payments for yourself or immediate family members.

Overall, investing in a traditional IRA is an effective way for self-employed individuals to save toward their future retirement goals while also taking advantage of current tax benefits available through deductions each year. This can be a fantastic opportunity for those in search of additional strategies to build up and hasten their retirement funds.

For those who are not eligible for employer-sponsored retirement plans, traditional IRAs can be an attractive option to save for the future. However, if you’re self employed and looking for an even more powerful way to accelerate your investments, the Solo 401(k) may be the right choice.

2. Solo 401(k)

Solo 401(k)s are an outstanding option for self-employed individuals looking to augment their retirement funds. With a Solo 401(k), you can contribute up to $22,500 per year ($66,000 in total if you’re over 50).

In addition, you can also make contributions of 20% of your net earnings from self-employment income up to a maximum of $57,000 per year (or $63,500 if you’re over 50).

The Solo 401(k) offers considerable tax benefits in comparison to other retirement plans. For instance, with this type of account all contributions and earnings are tax deferred until withdrawal.

This means that not only will your money grow faster due to compounding interest, it will also be sheltered from taxes until withdrawn in retirement. Also, any employer contributions made on behalf of the employee are deductible as business expenses which could potentially reduce taxable income for the current year.

Solo 401(k)s provide ample freedom when it comes to investment selections, granting investors more control than conventional IRAs or Roth IRAs. No custodian is needed, and the IRS imposes no rules constraining your options; stocks, bonds, mutual funds are all viable investments. Additionally, there’s no requirement for minimum distributions as with traditional IRAs, so you can keep your money invested for longer if desired.

Overall, Solo 401(k)’s provide numerous benefits and should definitely be taken into consideration by anyone who is self-employed and looking to accelerate their investment portfolio towards achieving financial independence in retirement years.

For self-employed individuals, a Solo 401(k) can be an excellent option for both retirement savings and tax reduction. Subsequently, for those seeking increased leeway in their retirement organizing, the SIMPLE IRA is an alternative.


The SIMPLE IRA is a great retirement savings option for self-employed individuals. It allows you to contribute up to $15,500 or $19,00 if you’re over 50 each year on a pre-tax basis and enjoy tax-deferred growth on your investments. This means that any gains in the account are not taxed until they are withdrawn in retirement. You can choose from a variety of investment options, such as stocks, bonds, mutual funds and more.

You also have the flexibility to choose how much you want to contribute each year – whether it’s the maximum allowed or just enough to get started with investing. Automatic deposits from your bank can be established to ensure that retirement savings are not neglected due to lack of energy or inspiration.

Another benefit of the SIMPLE IRA is its low cost structure compared with other retirement accounts like 401(k)s and IRAs. There are no annual fees associated with this type of plan; instead, there may be transaction costs depending on what type of investments you make within it.

Also, employers who sponsor these plans often provide matching contributions as an incentive for employees to save more for their future – which can help accelerate your savings rate significantly.

Finally, withdrawals from a SIMPLE IRA before age 59 ½ will incur penalties unless certain conditions apply, such as disability or death (in which case distributions would be penalty free). Therefore, it is important to consider the long term implications before withdrawing funds early since those penalties could add up quickly over time.

SIMPLE IRAs are a terrific choice for the self-employed, offering adaptability and tax incentives. Now let’s explore another great retirement option – Roth IRAs – which can provide even more benefits to those who qualify.

4. Roth IRA

Roth IRAs are a great option for those looking to save for retirement without sacrificing the immediate tax break that comes with traditional and SEP IRAs. Contributions are not deductible from your taxable income, but all earnings grow tax free, and withdrawals in retirement are also tax free. Roth IRAs are a great selection for self-employed people who want to reap the long-term rewards of saving without having to pay taxes on their investments initially.

A Roth IRA can be seen as a form of financial security, allowing for more control when handling finances in retirement. By strategically investing in both pre-tax and after-tax accounts, you can reduce the risk of taxation or penalties on withdrawals from either account type while diversifying your tax exposure. This strategy enables you to have more options available should the need arise for withdrawals from either account type without incurring any penalties or taxation on those contributions.

Another key benefit is that if you make regular contributions over time, they will continue growing even after you reach age 70 ½ – unlike other types of retirement accounts, which require mandatory distributions at that point. This allows investors to keep contributing into their account beyond what’s typically allowed with other types of plans while taking advantage of the tax deferral benefits the Roth IRA structure offers.

Finally, one major draw for many people considering opening a Roth IRA is its ability to help them maximize their savings potential during peak earning years before retiring. By investing now rather than waiting until later, savers can increase their wealth faster since there won’t be any additional taxes due on these amounts once withdrawn in retirement, thanks to the tax free growth feature offered by a Roth IRA account.


When it comes to self employed retirement options, there are a number of different accounts available. Various retirement accounts, such as Traditional IRAs, Solo 401(k)s, SIMPLE IRAs and Roth IRAs, offer different benefits and drawbacks for self-employed individuals to consider. It is critical for the self-employed to investigate the various choices in order to decide which one fits their necessities and monetary objectives. With careful planning and dedication, any individual can create an effective retirement plan that will help them secure a comfortable future.

Abby Hayes

Abby Hayes

Abby is a freelance journalist who writes on everything from personal finance to health and wellness. She spends her spare time bargain hunting and meal planning for her family of three. She has a B.A. in English Literature from Indiana University Purdue University Indianapolis, and lives with her husband and children in Indianapolis.

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