If you own your own small business that is either a sole proprietorship, a limited liability company or a partnership or are otherwise self-employed and do not qualify for a traditional IRA, there is a plan that will allow you to save for your retirement. As with a traditional IRA you can now begin saving for your future financial security but make sure you check your Roth Ira Eligibility.

 

We all need to think about what it will take to live the type of retirement that is worry free and financially sustaining. Most income earners make regular contributions into a traditional IRA and will enjoy tax benefits throughout their working years. Self-employed and small business owners can also plan for their future with one of two types of Keogh retirement plans. One of these is a defined benefit Keogh plan and can be rather complex to initiate as there could be issues with your Roth Ira Eligibility. If you are considering this plan, you need to avail yourself of the services of a pension specialist. A defined benefit Keogh plan is similar to a traditional IRA retirement savings plan. In this plan 100% of the contributions are made by you to your employees or to yourself. As the employer you can choose the amount that is received from the fund at retirement time providing you stay within certain regulated limits.

 

Based on a rather complicated formula, you can reach the specified amount by retirement time by making contributions into the Keogh account. The amount that you can contribute each year involves several factors such as life expectancy, age, your estimated retirement benefit and of course the number of years left until you reach retirement. For these and other reasons, unlike a traditional IRA, this type of plan does require a Roth Ira Eligibility pension specialist to set up and administer the plan. Older participants benefit more from a defined benefit Keogh plan; whether employees or owners; as larger contributions are required by the employer. This is necessary in order to adequately fund a pre-determined future benefit since there are fewer years left prior to retirement. Although this plan is more complex and more expensive to administer it often appeals to older owners who wish to maximize their contributions beyond the specified limitations of a defined contribution retirement savings plan.

 

A defined contribution plan is another way that the self-employed or business owner can save for retirement when a traditional IRA is not an option. This plan is often more appealing as it is less expensive to administer and is also much less complex. Once again, the employer makes 100% of all contributions for eligible employees as well as to yourself in Roth Ira Eligibility. All contributions for the employer and the eligible employees must be of the same contribution percentage based on income. The growth rate of your investments as well as the amount of annual contributions in a defined contribution plan will determine the value of your plan at the time of your retirement. There are also two types of defined contribution Keogh plans to choose from.

 

If you are self-employed and do not meet the requirements for aRoth Ira Eligibility, it is clear that you need to research the type of plan that is best suited to your particular needs. Take the time now to gather as much information as you can so you will be well prepared when you are ready to speak to a retirement plan specialist. The time you invest now to inform yourself of all your choices will determine the financial quality of your retirement years.