The SEP IRA is best for self-employed people with few or few employees. You can deduct less than 25% of your net income from self-employment or from your contributions. As an employer, whatever percentage you contribute to an employee, you must do so for everyone. You count as an employee, so if you contribute 25% for yourself, you should do it for everyone.
Yes, if you're a self-employed real estate agent, you can create an individual 401 (k) plan and deduct contributions. If you are a real estate agent who employs a small team of dedicated professionals, the SIMPLE IRA may be for you. An individual 401 (k) plan allows for employer and employee contributions, which is an important difference compared to an SEP that only allows employer contributions. Contributions to a Roth 401 (k) are made after paying taxes, which means they are not taxed when distributed.
Jason specializes in serving real estate professionals and other independent contractor business owners, helping them overcome their unique financial challenges, such as unpredictable tax and cash flow problems, so that they can achieve financial independence and be free from worry. SEPs are a good option for a self-employed real estate agent because they are simple and inexpensive to set up and maintain. That's because a Roth IRA is funded by after-tax income, meaning you can't use Roth IRA contributions to deduct your income taxes. Contributions to a traditional IRA can be tax-deducted in the contribution year, and the current income tax is paid at the time of withdrawal.
This is like an SEP, but because of the possibility of deferring employees, in addition to the employer's contribution, the Solo 401 (k) can often be more advantageous. Like other retirement savings vehicles, the Solo 401k is a useful tool for estate planning and asset protection. Most real estate agents don't have the advantage of an employer-sponsored retirement plan, and without a paycheck tied to an annual salary, making consistent deferrals can be tricky. If you don't have employees and you really want to maximize your savings, a 401 (k) Solo plan might be the best option.
In traditional IRAs, the individual contributes to their own account, but with an SEP IRA, the company contributes on behalf of the employee. From a business planning perspective, it may make sense to set up a plan that allows you to contribute for your employees. It may seem difficult to save for retirement as a real estate agent when you're not sure what your income will be from month to month or when you don't have an employer-sponsored 401 (k) plan. This is a great option for husband and wife teams that don't have any other employees.
You can double family contributions because each spouse has their own individual 401 (k) account.