How to Choose a Retirement Plan for the Self Employed

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How to Choose a Retirement Plan for the Self Employed

If you are self-employed, it can be difficult to save for retirement. Those who are not employees typically do not have access to an employer-sponsored plan, so they must often turn to alternative options. There are several ways that the self-employed can set up a retirement account and get the tax benefits available to them. Here’s what you need to know about setting up your own retirement plan.

Invest in Gold through the Self Directed IRA

It is possible to invest in Gold through a self-directed IRA. With a self-directed IRA, you are able to choose different types of investments for your retirement account. This means that instead of being limited to stocks, bonds, mutual funds, and CDs, you are free to purchase other assets like precious metals. The rules do vary slightly from one type of retirement account to another, but for the most part, it is easy to buy gold with an IRA. There are gold IRA companies that specialize in taking care of the details, and they can help you to get started. Having a gold individual retirement account is a great way to diversify your portfolio and safeguard your savings from economic downturns.

Gold prices tend to rise when the dollar is weak, making it a good hedge against inflation. While other investments like stocks and bonds can also be hedges against inflation, gold does not rely on any economic factors in order to appreciate value. Unlike financial assets that require an underlying economy to survive, physical assets like gold are valued for themselves

How to Save for Retirement with Self-Directed IRAs

There are several ways that you can save for retirement when your business is self-employed. A traditional IRA allows you to defer taxes until withdrawal, while a Roth IRA offers tax-free growth. You can also invest in gold through your self-directed IRA account. If your company is unincorporated, you can open an individual 401(k) plan. With this plan, you will be able to contribute up to $18,000 per year.

Factors to Consider

The main goal of retirement plan decision-making is to accumulate assets, but there are many factors that must be considered in performing a comprehensive analysis of a plan’s costs and benefits. Significant effects on the accumulation process include the contribution limits, the tax treatment of contributions and distributions, required minimum distributions (RMDs), borrowing features, investment options, fees, and expenses, plan termination provisions, availability of loans from the plan or from third parties, required documentation for loans from third parties, distribution options including lump sum versus periodic payments upon plan termination or hardship withdrawal requests, availability of alternatives to the company’s own defined contribution plan, and the impact of a company’s other associated plans, such as defined benefit plans or flexible spending accounts.

Benefits of an IRA Rollover to Your Offspring

If you decide to roll over your 401(k) plan to a self-directed IRA, choosing a child as the designated beneficiary can be an excellent estate planning strategy. Once your self-directed IRA is rolled over into your child’s name, he will be able to manage the account much like he would his own retirement account. He can contribute up to $5,500 per year (as of 2011), and he does not have to take required minimum distributions (RMDs) until April 1st following his 70th birthday – just like any other IRA owner. And, he won’t have to pay taxes on the amount of the rollover due to his status as a minor.

When you open a self-directed traditional or Roth IRA for your grandchild, you will act as both custodian and beneficiary. There are many benefits that this type of arrangement offers over other strategies like 529 plans. Since you are allowed to contribute up to $11,000 per year (or $13,000 if over 50 years old), it is possible for your grandchildren’s account to grow quickly; moreover, since you control the assets in the IRA, you are free to withdraw the funds at any time for your own use. As with a child IRA beneficiary, no taxes are owed on the amount of an IRA rollover due to his status as a minor.

Investment Strategies for Your Self-Directed IRA

When setting up your self-directed IRA, it is important to set up guidelines for investing within the account. Whether you have inherited an IRA or opened one yourself, you will need to decide how much risk is right for your investment strategies. If you want to invest conservatively, there are several options available including certificates of deposit (CDs), bond ladders, treasury securities, and money markets. You can also choose from stocks that are known to be safe companies with steady dividends.

When trying to decide which retirement plan is best for you, it’s important to understand the different options available from 401(k) plans to IRAs. A self-employed individual can talk to a Gold IRA company to help you with a gold investment. Whichever of these plans you choose, be sure it is risk-free and can guarantee you wonderful returns on your investment.

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