Owning your own business gives you the opportunity to forge your own path. Along with the freedom to work on your own terms and that includes your financial growth. While growing your business you need to consider the future that you want in retirement. The drawbacks self-employment is that you have no employer-sponsored retirement plan and you must plot your own course for when saving for retirement. There are several ways to go about planning your retirement, and the top four providers of 401 (k) plans for the self-employed include Fidelity Investments, John Hancock Retirement, Vanguard and Merrill Edge. They offer products to the self-employed that will help you grow you prepare for your financial future.
Top 401k Providers for the Self-Employed Worker:
- Fidelity Investments
- John Hancock Retirement
- Merrill Edge
The adaptability of Fidelity Investments 401 k plans gives you access to retirement professionals who can help you with your plan. A wide range of investments gives you flexibility and contributions to your fund can be made by phone or mail. The tax benefits of a 401 (k) are tax-deferred growth, taxable contributions, and pre-tax employee deferral contributions that will help you grow your business and your wealth for retirement.
Investment options with Fidelity Investments include investment opportunities with mutual funds, stocks, bonds, FDIC-insured CDs and ETF’s. One-on-one guidance is available in person, by phone or online along with research, tools will help you track your investments and make changes when you wish. Fidelity Investment 401 (k) plans are only available to individuals who are self-employed or own their own business.
- Numerous investment opportunities
- One-on-one guidance
- Plans for self-employed and business owners
John Hancock Retirement
Another advantage of a 401 (k) plan for the self-employed is that there are more options than if you are locked into an employer plan. John Hancock offers a Simplified Employee Pension (SEP) that is a popular choice for the self-employed. A SEP is simple and has high contribution limits, the opportunity to change your contribution percentage every year and it offers a maximum contribution of $50,000 or 25 percent of your compensation. There is a 10 percent tax penalty that applies to most money that is withdrawn before the age of 59-and-a-half.
The SEP is not the only 401 (k) plan offered by John Hancock Retirement but it gives one of the highest contribution rates available for your personal investments. On the other end of the spectrum is the Traditional IRA that can give you an upfront tax deduction. Although contribution for 2016 is $5,500 if you are under 50 and $6,500 if you are over 50, a traditional IRA can give you an immediate tax advantage. John Hancock offers these two products and more for the self-employed.
- Simplified Employee Plan is designed for self-employed workers
- Other options beyond the SEP
- Great client support
Along with other 401 (k) providers, Vanguard offers Individual IRA plans, and SEP-IRA and a Simple IRA plan that for the self-employed. Employee contributions of either pre-tax or Roth employee deferrals can contribute up to $18,000, per year, if you are under 50 and up to $24,000 if you are over 50. Contributions for this plan cannot exceed 100 percent of your earning compensation.
- Offers several IRA plans
- Established company with great reputation
- Vanguard offers many investment options
Individual or solo 401 (k) plans allow you to take a tax deduction for contributions that come from your business while reducing your personal taxes. Reducing your tax liability is another advantage of a 401 (k) and there are an array of products that can help you with saving for the future and dealing with today’s tax liabilities. The Merrill Edge Individual 401 (k) offers simple and straightforward pricing for the management of your investments, online access to your plan, 24/7, and educational resources to help you become as active in your investments as you are the growth of your business.
The Merrill Edge Individual 401 (k) offers the added benefit of access to your money through a 401 (k) loan option, giving you, even more, flexibility with your money. The benefit of flexible contributions based on your cash flow and a contribution limits as high as $53,000. The easy online set-up can take less than 30 minutes so waiting until tomorrow to invest in your future is not necessary. Like most of the top 401 (k) providers, the Merrill Edge plan offers help from a specialist who will gladly help you plan your future.
- Online access
- Merrill Edge Individual plan offers loan option to access funds
- Easy online setup
Planning for retirement is essential whether you’re self-employed or on a more conventional career path. Starting a 401k and making regular contributions is a great way to save without digging too deep into each month’s disposable income. Plus, over time, it’s an expansion of your salary. Each of the four firms mentioned above can get you started on the path toward retirement if you’re self-employed or own your own business.