Insuring Your Future: A Tax-Saving Retirement Guide for Insurance Professionals
You spend day after day helping your clients protect their assets from the unexpected. Take a moment today to think about protecting yourself from the 100% expected: your retirement.
As a self-employed insurance pro or business owner, you may not have the luxury of en employer-matched 401K built into your benefits package. That means it’s up to you, and you alone, to prepare for the future.
There are actually four retirement plans for self-employed workers that can help reduce your taxable income while saving for retirement.
If you have no employees other than a spouse, this type of plan is great because of it’s high contribution limit (up to $59,000 if you’re over 50) and because taxes are paid on withdrawals. Accounts with $250K or more do require an annual report with the IRS, but they are relatively easy to set up initially.
Simplified Employee Pension (SEP IRA)
These easy-to-set-up plans work well for self-employed workers with few or no employees. SEP IRA’s are also ideal if you’re looking to match contributions to profits, allowing you to contribute as much as $53,000 annually. Just keep in mind that if you do have employees, you can’t contribute a higher percentage to your own account than theirs.
Saving Incentive Match Plan for Employees (SIMPLE IRA)
The SIMPLE IRA plan makes sense if you have a small business with lot’s of employees. While matching contributions are deductible for you, and most employees don’t contribute, there is the possibility of mandatory matching contributions. SIMPLE IRAs have moderate contribution limits and require little set up or maintenance.
Defined Benefit Plan
This type of plan works well for solo self-employed workers with high, stable incomes and a desire to put a lot of money away for retirement. Contributions to this plan can be as high as $100K/year depending on your age, and all of those contributions are tax-free until you withdraw. The downside is that Defined Benefit Plans require you to commit to a certain funding level when you set them up — and if you have employees, you must make contributions on their behalf.
No matter which plan you decide to go with, the key is to start now, while time is on your side!