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Beth A. Botti, CFP®, ChFC, CLU, CDFA™
Financial Consultant
California Insurance License #0G24537
612 Wheelers Farms Road, Milford, CT 06460
Phone: 203-877-6556 Ext. 169
Fax: 203-301-0736
Email: beth.botti@equitable.com
January/February 2020
One Person, One Plan
Make contributing to a company retirement plan a New Year’s resolution, even if you are the company. Today’s retirement plan options offer choice, flexibility and ease of use, while they typically feature tax-deferred contributions and potential growth, and increased contribution limits for participants age 50 and older. Here is a look at three of these plans with contribution limits:*
SIMPLE
The cost of setting up a SIMPLE IRA is reasonable, and the plan offers some flexibility. You can either match up to 3% of compensation if your company matches employees’ individual contributions or put away up to 2% of salary, not to exceed $13,000 in tax year 2019. Small business owners who have employees must also contribute to eligible employees’ accounts.SEP-IRA
When it comes to contribution limits among qualified retirement plans, the Simplified Employee Pension (SEP) is generous. Solo business owners may contribute up to $56,000 or 25% of net earnings of up to $280,000 in 2019, whichever is less. If you’re self-employed, the calculation is more complicated. You can also make catch-up contributions at age 50 and beyond. There are exceptions if your business has another defined contribution plan in addition to the SEP-IRA, and rules for which employees qualify.Individual 401(k)
Whether you have a solo business or make extra income on the side, you may qualify to put money away into an individual, or solo, 401(k) plan. And as a solopreneur, you can contribute to your 401(k) plan as both an employer and an employee.For 2019, you could defer up to 100% of compensation or earned income, up to $19,000, plus another $6,000 if age 50 or older.* Then, as an employer, you could have contributed more — with combined contribution limits potentially as high as the SEP’s. If you hire employees and they meet the plan eligibility requirements, you must include them in the plan, and all employees, including you, will be subject to non-discrimination testing.
Compare
All three of these plans have specific rules and regulations that you must follow, including penalties for early distributions, so talk to your tax and financial professionals to learn more.*https://www.irs.gov/pub/irs-pdf/p560.pdf
GE-2756113 (10/19) (Exp. 10/21)
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Duly registered and licensed financial professionals offer securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA,SIPC (Equitable Financial Advisors in MI & TN), offer investment advisory products and services through Equitable Advisors, LLC, an SEC-registered investment advisor, and offer annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of Utah, LLC in UT; Equitable Network of Puerto Rico, Inc.). Equal Opportunity Employer - M/F/D/V. Equitable Advisors and its associates and affiliates do not provide tax, accounting, or legal advice or services. Representatives may transact business, which includes offering products and services and/or responding to inquiries, only in state(s) in which they are properly registered and/or licensed. Your connection to this website does not necessarily indicate that the sender is able to transact business in your state. The information in this website is not investment or securities advice and does not constitute an offer. For more information about Equitable Advisors, LLC you may visit https://equitable.com/crs to review the firm's Relationship Summary for Retail Investors and General Conflicts of Interest Disclosure.
GE-6572038.1 (4/24)(Exp. 4/26)
CFP®, and CERTIFIED FINANCIAL PLANNER™ are certification marks owned by the Certified Financial Planner Board of Standards, Inc. These marks are awarded to individuals who successfully complete the CFP Board's initial and ongoing certification requirements.
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