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Tax Tidbit 11/15/08: 2008 Planning - Retirement Savings for the Self-Employed

In recent years, many options have become available to self-employed individuals to provide for their retirement. Tax planning for retirement can include contributions to a Keogh plan, traditional or Roth IRA, SEP plan, SIMPLE plan or a one-person 401(k) plan. You may wish to consider the implementation of one of these plans for yourself and/or your employees to benefit from a current tax year deduction and accumulate tax-deferred retirement savings. 

Each of these plans has advantages and disadvantages, and some may not be applicable to your situation. For instance, a sole-owner 401(k) retirement plan allows a contribution for you as both an employer and as an employee. Therefore, a sole-owner 401(k) may provide for the largest deductible contribution. However, a sole-owner 401(k) is not available to the self-employed with employees other than a spouse or relative. As an alternative, a Keogh plan provides more flexibility, but is more complicated to maintain than a SEP or SIMPLE plan. Regardless, of which plan you qualify for or what your retirement needs are, it is important to begin planning now for your retirement. 

We will be happy to discuss the various retirement plan options and how they might apply to your business.  Please contact Bedard, Kurowicki & Co., CPA's, PC at (908) 782-7900 or email info@bkc-cpa.com