CHAPTER 41Retirement 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.
If you choose to set up a retirement plan covering at least one participant who isn't ...
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