Chapter 41 Retirement and Medical Plans for Self-Employed

Self-employed persons and partners can take advantage of tax-sheltered retirement plans or simplified employee pension plans (SEPs) (41.2).

Advantages flow from: (1) tax deductions allowed for contributions to the plan (a form of forced savings); (2) tax-free accumulations of income earned on assets held by the plan; and (3) in limited cases, special averaging for lump-sum benefits paid from a qualified retirement plan on retirement.

If you have employees, you must consider the cost of covering them when setting up your plan.

If you do not have any other retirement plan and have no more than 100 employees, you may set up a salary-reduction SIMPLE plan.

Sole proprietors must have minimum essential health coverage. Those who want to buy it through a government exchange must use the Marketplace for individuals; they cannot use the SHOPs for small businesses. Self-employed persons ...

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