How the Self-Employed Can Save for Retirement
Self-employment has become an increasingly popular lifestyle choice in the US: The Bureau of Labor Statistics estimates that in 2015, just over 10% of the working population was self-employed. Fortunately, retirement savings options for independent contractors and small businesses have grown to include some extremely appealing choices.
Simplified Employee Pension (SEP) plans are usually the best choice for small business owners who don't have employees. SEP-IRA accounts are easy to set up and have low or no account fees and extremely flexible contribution rules. If you don't have employees you can contribute as little or as much as you want to your SEP-IRA, up to a maximum of 25% of your total compensation or $54,000 (in 2017), whichever is lower. And you can make your contributions at any time during the year.
If you have employees, you can still have a SEP plan -- but contribution rules get a bit more complicated. Basically, if you contribute to one SEP-IRA (including your own) you have to make equivalent contributions to every other employee's SEP-IRA. You can set certain requirements as to which employees are eligible to have SEP-IRA accounts: Typically, an employee must have worked for you for a certain number of years, must be a certain age, and must have earned a minimum amount.
Source: Fool.com
