This self-employment retirement account comparison has been updated for 2023 & 2024 tax years. My search for the ideal self-employment income retirement account began when, while filing my tax returns in prior years, I noticed I would owe significant taxes due to self-employment income such as 1099s and side projects unless there was some way I could reduce taxable income – especially during years when full-time employment income supplemented side project income.
Mrs. 20SF and I filed jointly, so our combined income exceeded the IRA contribution limits; thus we could not contribute to a Traditional IRA, while contributing after-tax funds to a Roth IRA would have rendered any benefit of reducing our taxable income moot.
After several years of running this site and earning (mostly small) side self-employment income beyond my regular day job, I decided to explore retirement plans that included self-employment income. “Self-employment” can refer to any sort of income received from projects, 1099s, businesses, side income sources or real estate properties – among many other sources.
I uncovered three retirement plan options for self-employment income that I will discuss in more depth in subsequent articles:
Today I will outline the differences among SEP IRA, Solo 401K (sometimes known as an individual 401K), and SIMPLE IRA plans, in order to help you select an effective self-employment retirement plan.
Note: I also conducted an in-depth ranking of the best retirement accounts for non-self employment income that may also interest you.
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