How to Start a Retirement Account if Your Employer Doesn’t Offer One

It is easy to neglect to save for retirement when you are doing so on your own. Whether you are self-employed, work for a small company or start-up, work part-time, or your employer does not offer a retirement plan, you may be overwhelmed by the idea of managing a retirement plan. Before jumping into a savings plan, you should explore your options and pick the best one. If you are not fortunate enough to have an employer who has a retirement program, there are some retirement accounts you should consider starting on your own.

Individual Retirement Accounts (IRA)

Individual retirement accounts (IRA) are tax-advantaged accounts that come in two different types: traditional and Roth. Roth IRAs allow you to withdraw your money from the accounts tax-free at retirement. Traditional IRAs allow you to deduct any contributions from your taxable income. IRAs are a good option for anyone whose employers do not offer a plan. These accounts do have contribution limits:

  • Roth IRA Contribution limits- $5,500
  • Roth IRA Contribution limit, if 50 or over- $6,500
  • Traditional IRA Contribution limit- $5,500
  • Traditional IRA Contribution limit, if 50 or over- $6,500.

These accounts also have a limit of your taxable compensation for the year. These accounts are good for someone who wants a straightforward way to save for retirement outside of a company-sponsored 401(k).

SEP-IRAs

Simplified employee pension individual retirement accounts (SEP-IRAs) are popular among people who are self-employed. You can save a significant portion of your company’s earnings in a SEP-IRA. The contributions your “company” makes are tax-deductible and easily contributed. These accounts are perfect for the self-employed, small business owners, and freelancers. SEP-IRA contributions cannot exceed the lesser of either 25 percent of the employee’s compensation or $54,000. If you are self-employed and wants to save more than $5,500 limit imposed on a regular IRA, the SEP-IRA is easy to open and does not require a huge amount of paperwork to get started.

Individual 401(k)s

Also known as a solo 401(k) or a self-employed 401(k), these accounts allow you to save quite a bit of your earnings. Although individual 401(k)s allow you to save money, they are also complicated to get started and they have a few guidelines contributors must follow in order to use them. Individual 401(k)s also come with higher fees attached to these accounts. Self-employed individuals and small business owners can benefit from these accounts. Individual 401(k)s also have a high contribution limit, which makes them good accounts for both employees and employers. There are two types of contribution limits: employee contributions and employer contributions. Employee contributions have a maximum amount of $18,000 or $24,000 in age 50 or older. Employer contributions cannot exceed $54,000. If you are trying to save a lot of money than an individual 401(k) is the retirement account for you.

There are many ways you can save for your own retirement without the help of your employer. But one thing you should do before opening one of these accounts is talking to a financial planner at WeberMessick. With our experts on your side, you will be able to save enough money to do everything you want to do during your retirement. For more information on these and other retirement account options, call WeberMessick today!

Retirement Accounts with WeberMessick

Want more information on retirement accounts? Contact WeberMessick today! Since 1984, WeberMessick’s team of CPA’s and financial advisors have been helping individuals and businesses throughout the Maryland and Delaware devise a plan for their finances. With a “client-first” philosophy, WeberMessick has been helping their clients achieve financial success. Whether it is through financial planning or our accounting services, WeberMessick is always here for you!

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