| In an unstable economic landscape where layoffs are | | | | defined benefit Keogh. Contributions to each are |
| increasingly common, many independent minded | | | | deductible as long as the plan is put into place prior to |
| individuals decide to create their own job by starting | | | | the end of the tax year. The profit sharing version |
| their own business. Self employment and business | | | | permits contributions of a percentage of all income |
| ownership demands unwavering focus on doing | | | | earned from self employment or monies earned as |
| whatever it takes to build and grow a successful | | | | an employee of one's own company, up to $49,000. |
| enterprise. Unfortunately, the attention that is | | | | Formal plan documents are necessary, and annual |
| typically given to running the business does not | | | | reports will need to be filed with the IRS. |
| always carry over to the realm of careful planning for | | | | The purpose of a defined benefit Keogh plan is to |
| retirement. However, with the assistance of self | | | | generate an annual retirement benefit of a |
| employed retirement calculators such as those readily | | | | predetermined amount, up to $195,000. For this type |
| available on the internet, and a wealth of information | | | | of plan, an actuary will need to be hired to determine |
| about available retirement plans, a financially secure | | | | the necessary contribution amount to attain the |
| future is within reach for independent businessmen | | | | desired annual benefit. One of the many available self |
| and women. | | | | employed retirement calculators can help with a |
| It is not uncommon for would-be business owners to | | | | preliminary estimate of what might be required. |
| be scared away by the substantial self employment | | | | Keogh plans are favored by many because they |
| tax burden that comes with being one's own boss. | | | | permit greater contributions than other types of |
| On balance, however, the many tax advantageous | | | | plans, and are therefore rather more attractive to |
| retirement options available to the self employed can | | | | older taxpayers. |
| serve to outweigh what is sometimes seen as a | | | | Simplified employee pensions, or SEPs, are |
| negative factor. Some time spent with one of many | | | | streamlined, basic retirement plans which permit |
| available self employed retirement calculators will | | | | contributions and deductions of up to 20% of one's |
| demonstrate that it is often possible for independent | | | | self employment income or up to 25% of income |
| business owners to commit more funds to their | | | | earned as an employee of the company one owns. |
| retirement plans than typical wage earners could ever | | | | The individual taxpayer may allocate varying |
| fathom. The most commonly discussed plans aimed | | | | percentages each year, which is useful in situations |
| toward the self employed include Keogh plans, | | | | where cash flow may be uncertain from year to |
| simplified employee pensions (SEPs), Roth IRAs and | | | | year. Self employment retirement calculators are |
| solo 401(k) plans. | | | | useful in determining an appropriate allocation in a |
| Keogh plans are the most like typical corporate | | | | particular year. There are no annual IRS reporting |
| retirement plans of any of those utilized by self | | | | requirements for SEPs, and they may be established |
| employed individuals. Two types of Keogh plans | | | | at anytime up to the date of any income tax filing |
| exist, namely the profit sharing Keogh and the | | | | extension received by the taxpayer. |