Self-employed workers have an option for significant retirement savings that is UNDER-UTILIZED, yet so extremely simple. Experts estimate that Americans will need 70 to 90 percent of their preretirement income to maintain their current standard of living when they stop working. It’s crucial for the Self-employed to understand the opportunities in a Simplified Employee Pension (SEP) Plan.

A Simplified Employee Pension Plan (SEP IRA) is the easiest small business retirement plan to administer and maintain, and helps individuals and business owners get access to a significant tax deferred benefit when saving for retirement. A self-employed worker can defer up to 25% of their taxable income to a maximum of $56,000 per year. In comparison, a traditional IRA has a maximum of $6,000 annually.

If you’re self-employed, you work 24/7 and you save annually for a hefty tax bill in April. Neglecting to maximize retirement savings potential can be devastating now and in the future. The immediate impact of deferring a large amount of income to a SEP is a significant reduction in your tax liability. Long-term, you will be able to design your retirement experience without worry of outliving your money.

It’s not too late for 2018! You can open a SEP and fund it for 2018 up until the tax deadline!

Before making any long-term decisions about your retirement strategy, you should understand the ins and outs of a SEP IRA.

A SEP IRA…

  1. Requires very little paperwork
  2. Allows flexible contributions
  3. Allows investments to grow tax deferred
  4. Allows business owners to contribute up to the lesser of 25% of participants’ pay, or $56,000
  5. If you have an employee, you must fund your employees SEP at the same rate as your own.

If you’re interested saving on your 2018 tax bill, contact us about opening a SEP IRA today before the TAX DEADLINE. Email Kevin at kward@park-elm.com and request a free Business Owner’s Guide for Retirement and an introductory financial analysis.