Image: J. Kelly Brito on Unsplash

For those with money to spare, the SEP IRA contribution limit is increasing by $1,000 in 2019, from $55,000 to $56,000.

SEP IRAs are traditional retirement accounts for small business owners and employees, including self-employed freelancers. Contributions are tax-deductible, and, as with a traditional IRA, your investments grow tax-deferred until you withdraw the funds, at which point they’re taxed as income.

With SEP IRAs, the employer makes the contributions, which cannot exceed the lesser of:

  • 25 percent of compensation
  • $56,000 for 2019

That’s what makes them so appealing to freelancers: If you can swing it, you can save and invest significantly more than you can with a traditional IRA, which can give you an edge in retirement (not to mention it’s simpler—hence the name—to set up an SEP).

Down sides: There are no catch-up contributions for people over 50, and if you work for a small employer, you’re reliant on them to make contributions for you.

The contribution limit for solo 401(k)s, which can only be opened by business owners with no employees, was also boosted by $1,000 to $56,000 for 2019. These accounts also allow $6,000 in catch-up contributions for business owners over 50 (the math, of course, is more complicated than that).

401(k) and regular IRA/Roth savers are also able to save a bit more in 2019, to keep pace with inflation.



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