 TITLE: 6 Ways to Save for Retirement When You’re Self-Employed CONTENT: Retirement Plans for Self-Employed Individuals\n----------------------------------------------\nThose who are self-employed have many options when it comes to saving for retirement, including some of the same savings vehicles open to employees, such as 401(k) plans. You can set up any of the plans below through a bank, mutual fund or brokerage.\n### One-Participant 401(k)\nSometimes called \"solo 401(k),\" \"individual 401(k)\" or \"uni-401(k),\" 401(k) plans for one participant work just like a workplace 401(k): You make pretax contributions and are taxed when you begin making withdrawals, which you can do starting at age 59½.\nYou can contribute to a one-person 401(k) twice: once as an employee of your own business and again as an employer. As an employee, you can put up to 100% of your annual earned income into the plan, up to a maximum of $19,500 in 2021 (those ages 50 and up can make an additional catch-up contribution of $6,500). You can then make a contribution as an employer of up to 25% of your maximum contribution limit. You'll need to use an IRS worksheet to calculate that limit. For 2021, the maximum employer contribution is $58,000 (not including catch-up contributions).\n### Traditional or Roth IRA\nTraditional and Roth IRAs differ in their eligibility rules, tax treatment and when money can be withdrawn without a tax penalty.\n**Traditional IRA**: Contributions to a traditional IRA are generally tax-deductible unless you or your spouse has access to a workplace retirement plan or your income is above a certain threshold. You pay taxes when you withdraw the money, which you can start doing at 59½. (In some situations, you can withdraw money earlier without penalties.) You must start withdrawing money at age 72.\nThere are no upper income limits on who can contribute to a traditional IRA, and you can contribute until age 70½. However, annual contribution limits are fairly low—just $6,000 for 2021 ($7,000 for those age 50 and up).\n**Roth IRA**: With most other retirement vehicles, you contribute pretax income that gets taxed when you withdraw the money in retirement. Roth IRAs work a bit differently: Contributions are made post-tax, but can be withdrawn at any time, tax-free. Withdrawn earnings are generally subject to taxes and penalties if you are under 59½ and have had the account less than five years, except in certain situations. Once you're 59½, they can be withdrawn tax-free too.\nYou can contribute to a Roth IRA your entire life and never have to withdraw money from it—you can leave it to your heirs.\nFor 2021, the maximum contribution to a Roth IRA is $6,000 ($7,000 for those ages 50 and up). There are other financial restrictions: You can't contribute to a Roth IRA if you have a modified adjusted gross income (AGI) of $208,000 or more (if married) or $140,000 or more (if single). Your maximum contribution is reduced if you're married with a modified AGI of at least $198,000 but less than $208,000, or single with a modified AGI of at least $125,000 but less than $140,000.\n### Simplified Employee Pension (SEP)-IRA\nAn SEP-IRA is an IRA designed for self-employed people. For 2021, you can contribute up to 25% of your net earnings from self-employment or $58,000, whichever is less. (You'll need to do some calculations to determine your contributions.) Contributions are tax-deductible.\nSEP-IRAs have higher contribution limits than many retirement plans, so you can save faster, but they don't allow catch-up contributions.\n### Savings Incentive Match Plan for Employees (SIMPLE) IRA\nIf you received at least $5,000 in compensation from your business in each of the previous two years, you can make pretax contributions to a SIMPLE IRA. As of 2021, up to $13,500 of your net earnings from self-employment can go into the plan. (If you're 50 or older, you can put in an extra $3,000.) In addition, you can either contribute up to a 3% match of your net earnings from self-employment, or make a fixed contribution of 2% of net earnings from self-employment that don't exceed $290,000 for 2021.\n### Other Investment Options\nOnce you have your retirement savings on track and a flush emergency fund, you may want to consider making other investments, such as stocks, bonds, mutual funds or exchange-traded funds, or real estate investment trusts (REITs).\nNon-retirement investment accounts let you invest as much money as you want, depending on your budget and the level of risk you're comfortable with. If you're a confident investor, you can open an online brokerage account and manage your own investments, or have a financial advisor or robo-advisor handle it. END