Posted on April 26, 2006 at 16:49:37:
Being self-employed comes with some nice retirement options.
A Simple IRA is easy to set up and easy to continue if you hire others, but the cap on contributions is skimpy: $10,000 or $12,500 for those 50 or older. The Simplified Employee Pension IRA is easy to set up and flexible. You can stash away 25 percent of income, up to $44,000, but the plan can get expensive once you have employees. The Solo 401(k) has much higher limits, and you can borrow against the balance. Stash away 100 percent of the first $15,000 of income, plus 25 percent of total net income, up to $44,000, or $49,000 for those over 50. (More? There are profit-sharing options, somewhat more complicated.) If you’re maxed out on fully deductible plans, look at a Roth IRA.
Insurance? A one-person shop will probably do best with a high-deductible health insurance plan and term life insurance. Disability insurance may be hard to come by.