Solo 401k vs SEP IRA:

A Comparing For the Self-Employed

Self-employment can offer an excellent work-life balance, as well as other freedoms and lifestyle benefits! Seriously though, self-employment will likely be the cause of you working 80 hours a week.

Why Do I Need a Retirement Plan?

You Need Money to Stop Working To Reduce Your Taxes

So Where Do I Start?

OK, I’m just going to cut to the chase–if your company is just you and/or your spouse, go with the Solo 401k. But keep reading to see why…

Mainly because a Solo 401k (as the word “solo” indicates) is for an individual person. A traditional 401k would accommodate someone with employees.

It’s also worth noting that in the case of both retirement plans, the employer (you) and employee (you) have to set up accounts associated with the plan. So the employer creates the pension plan, and then the employee has a “participant” account.

The Most Significant Distinctions Between the SEP IRA vs Solo 401k

The term IRA stands for “Individual Retirement Account,” one of the two most standard retirement accounts that any individual can have.

A SEP IRA stands for “Simplified Employment PlanIRA. It’s a retirement plan that is intended for businesses, and allows participation by owners and employees.

A 401k is the other most common retirement account, but is more commonly known as a plan available to employees through their job.

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