Individual 401 (k) plans are similar to employer-provided plans and offer high contribution limits, but they also carry a relatively high administrative burden, and some brokerage firms charge fees for individual 401 (k). If you exceed them, you won't be able to contribute at all to a Roth IRA or make tax-deductible contributions to a traditional IRA. As a business owner, you can choose whether to contribute to employee profit sharing plans, but you cannot discriminate in favor of highly paid employees. You may also want to keep your Roth IRA at the same company that offers SEP or other types of IRAs, such as a Self-Directed Gold IRA.Consult your tax advisor for more detailed information on the Roth IRA or for advice on your individual situation.
Nor is a Roth IRA specifically designed for self-employed small business owners, such as the SEP and SIMPLE plans. Traditional IRAs and Roth IRAs aren't exclusive to the self-employed, but people who work independently or who own their own business can contribute to these plans. IRA plans allow for some early retirement exceptions (for things like some higher education expenses or health insurance premiums if you're unemployed). 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.
You are eligible for a SIMPLE IRA as a self-employed person or if you have a business with up to 100 employees. If you have a spouse who works and earns income from this company in some way, you can make the same contributions for each of you. A simplified employee pension IRA (SEP) is designed for self-employed workers and small business owners. These plans offer tax advantages for contributions, but each has different rules, requirements, and contribution limits.
Contributions are fully deductible for all people who are not actively involved in employer-sponsored plans or for plan participants within certain income ranges. The biggest difference between an SEP (simplified employee pension) and a Roth IRA is that the SEP has much higher contribution limits. IRA contributions are not considered a business expense, although they can help reduce your individual tax liability.