As your own employer, you have the sole responsibility of funding your retirement. You have several options as a self-employed individual, including two IRAs that enable you to provide retirement funds for your employees as well.
Solo 401(k) – Annual tax-deferred contributions up to a set maximum plus an additional 25% of self-employment income for business owners, up to a combined maximum. Additional catch-up contribution for those 50 or older.
SEP IRA – Your annual contribution is 25% of your compensation up to a maximum of $53,000 for 2015. Contributions are 100% tax deductible and earnings grow tax deferred. If you use a percentage of your compensation to calculate your retirement contribution, you must make contributions for your employees at the same percentage.
SIMPLE IRA – This tax-deferred retirement plan is an option for small business owners with fewer than 100 employees. Contribute up to $12,500 annually with a catch-up limit of $15,500 for those 50 or older. Employers must match up to 3% of an employee’s contributions on a dollar-for-dollar basis.
For an appointment or more information, call us at (808) 525-6280 or visit any conveniently located First Hawaiian Bank branch and ask to speak to a Wealth Advisor.