An IRA is probably the easiest way for self-employed people to start saving for retirement. There are no special presentation requirements and you can use it regardless of whether you have employees or not. Simply put, Roth IRAs are particularly good for people who expect to pay a fairly high tax rate when they retire. That includes many people who are self-employed, such as small business owners who could withdraw money from their companies later in life.
You may also want to keep your Roth IRA at the same company that offers SEP or other types of IRAs. The SIMPLE IRA uses the rules of a traditional IRA, so it is tax-deferred and has the same retirement requirements when you retire. You are eligible for a SIMPLE IRA as a self-employed person or if you have a business with up to 100 employees. The SIMPLE IRA is an easy way for small employers, including self-employed workers, to offer employees a retirement plan.
However, keep in mind that contribution limits for accounts with tax requirements, such as IRAs, are not considered separately. A SIMPLE IRA may be easier for an employer to set up than many 401 (k) plans, which have complex rules. You should be able to find broad-based, low-fee funds for your Roth IRA with an expense ratio of less than 0.25% per year. And using an SEP IRA won't stop you from using a traditional or Roth IRA (which you really should do).
Even if you participate in a retirement plan as a self-employed person (including the SEP IRA or SIMPLE IRA), you can still participate in a traditional IRA or a Roth IRA. The individual 401 (k) plan has even another more subtle benefit that may make it a better choice than the SEP IRA for people with low incomes or for those who use their business as a side job. So, you can maximize your contributions to any of the above retirement plans and still make the most of your own personal IRA. An SEP IRA allows a company to make employer contributions to employees, including the self-employed.
SIMPLE IRAs offer a low administrative burden, a higher contribution limit than traditional or Roth IRAs, and the ability to contribute more money to your own retirement account than to those of your employees. Traditional IRAs allow you to make tax-deductible contributions and Roth IRAs allow you to make after-tax contributions, and money grows tax-free. Retirement plans for self-employed people range from the best to the tremendously good, and they can allow you to save much more than you could save with a traditional business plan.