2. How to choose retirement account ?


If you’re a small business owner, the most logical option is to open a SEP (Simplified Employee Pension) IRA. Its simple setup and ease of use through many brokerage firms, makes it an attractive vehicle for saving for retirement.

Even a few robo advisors, like Betterment, are now able to manage a SEP IRA through their service — potentially saving you hundreds of dollars in management fees.


  • Contribute 25% of Your Salary – Even though it’s called a SEP IRA, you can contribute up to $56,000 or 25% of your annual salary (in 2019), or whichever is lesser.
  • No Income Limits – Unlike Traditional and Roth IRAs (which are discussed in-depth below), SEP IRAs have no income limits. This means your business’ earnings won’t be capped at a certain amount of money in order to qualify.
  • Flexible Contributions – If you have a tough year financially, you can choose to skip contributes this year. Then if you have a great year, you can fund the plan with a larger amount than originally intended.
  • Low Annual Fees – Depending on where you open the SEP IRA account you could pay no or low annual fees.


  • No Employee Contributions – A SEP IRA is best if you’re a one-person show and plan to continue that way, so employee contributions aren’t allowed. The employer is responsible for distributing funds at his discretion.
  • Inclusive Participation – An employer cannot selectively decide which employees will benefit from a SEP IRA. The company must contribute for the benefit of everyone, or no one.

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