Anonymous wrote:

Anonymous wrote:

Anonymous wrote:12:04/13:21 - I should say these numbers are approximate, as the calculation includes a few nuances. Page 9 of fidelity's "contribution worksheet" shows the calculation you would use to determine your max.

Also - this won't help you for 2013, as I believe it had to be opened by the end of the year. It will help you going forward. First thing to do is apply to the IRS for an FEIN, you can just use your name. Once the FEIN is issued, use that to open the 401k and have your client use that rather than your SS.

Thanks - yes this would be for my 2014 tax year.

Is there any type of "phase out" associated with this? I.e., DH and I file jointly, his income is in the $275 range. Mine would be an additional $40-50K.
I should also add that he takes advantage of Catch-up contributions so is currently deferring about $23K per year.

OP here - I just realized that 12;31 already answered this. thanks.

There is no phase out, it is similar to a retirement plan if you were an employee, no consideration for your spouse. The only caveat (which doesn't apply to your situation) is the deferral amount (17,500) is shared between all 401k accounts, so if you also were an employee somewhere with a plan you would have to manage salary deferral between the two.

The individual 401k would also allow you to make catchup deferral contributions if you are old enough and so inclined.

Anonymous wrote:

Anonymous wrote:12:04/13:21 - I should say these numbers are approximate, as the calculation includes a few nuances. Page 9 of fidelity's "contribution worksheet" shows the calculation you would use to determine your max.

Also - this won't help you for 2013, as I believe it had to be opened by the end of the year. It will help you going forward. First thing to do is apply to the IRS for an FEIN, you can just use your name. Once the FEIN is issued, use that to open the 401k and have your client use that rather than your SS.

Thanks - yes this would be for my 2014 tax year.

Is there any type of "phase out" associated with this? I.e., DH and I file jointly, his income is in the $275 range. Mine would be an additional $40-50K.
I should also add that he takes advantage of Catch-up contributions so is currently deferring about $23K per year.

OP here - I just realized that 12;31 already answered this. thanks.

Anonymous wrote:12:04/13:21 - I should say these numbers are approximate, as the calculation includes a few nuances. Page 9 of fidelity's "contribution worksheet" shows the calculation you would use to determine your max.

Also - this won't help you for 2013, as I believe it had to be opened by the end of the year. It will help you going forward. First thing to do is apply to the IRS for an FEIN, you can just use your name. Once the FEIN is issued, use that to open the 401k and have your client use that rather than your SS.

Thanks - yes this would be for my 2014 tax year.

Is there any type of "phase out" associated with this? I.e., DH and I file jointly, his income is in the $275 range. Mine would be an additional $40-50K.
I should also add that he takes advantage of Catch-up contributions so is currently deferring about $23K per year.

12:04/13:21 - I should say these numbers are approximate, as the calculation includes a few nuances. Page 9 of fidelity's "contribution worksheet" shows the calculation you would use to determine your max.

Also - this won't help you for 2013, as I believe it had to be opened by the end of the year. It will help you going forward. First thing to do is apply to the IRS for an FEIN, you can just use your name. Once the FEIN is issued, use that to open the 401k and have your client use that rather than your SS.

Anonymous wrote:ISTR that a SEP IRA was less paperwork with almost as high a contribution limit, fwiw.

They both have the same max (51k), so it's even if you make 250k, but if you are below that and want to save more the 401k is the way to go. If we use 40k in self employment profit - The SEP-IRA is strictly % profit - so OP could put away 8k with a SEP-IRA. 401k allows salary deferral + % profits, for a total of 22k saved (17.5k + 4,500). The ability to defer tax on an extra 14k is worth the extra form that you don't even have to send in until you have 250k in the plan.

Anonymous wrote:We do SEP IRA.

Is SEP based on % of income or is there a flat number that you are allowed to put in regardless of income?

Anonymous wrote:Is your question about whether you are an employee or independent contractor OR about what retirement plan is best for self-employed workers?

I am definitely and independent contractor. I pay all of my own taxes. get a 1099. so question really is regarding which plan fits my "status" best.

We do SEP IRA.

ISTR that a SEP IRA was less paperwork with almost as high a contribution limit, fwiw.

Anonymous wrote:If you want to put in the most, then individual 401k. It allows you a flexibility that the SEP-IRA plans do not (salary deferral + % of profits). The downside to the indy 401k is that you have to have an FEIN (easy) and you will have to fill out some plan docs and technically have to fill out an annual form (which doesn't get filed unless you have over 250k in plan assets).

Fidelity has a no cost one that was really easy to open and manage.

Thanks!! I knew there was someone on here who had knowledge on this. Going to look at Fidelity right away.

Is your question about whether you are an employee or independent contractor OR about what retirement plan is best for self-employed workers?

If you want to put in the most, then individual 401k. It allows you a flexibility that the SEP-IRA plans do not (salary deferral + % of profits). The downside to the indy 401k is that you have to have an FEIN (easy) and you will have to fill out some plan docs and technically have to fill out an annual form (which doesn't get filed unless you have over 250k in plan assets).

Fidelity has a no cost one that was really easy to open and manage.

I am so confused about what kind of retirement "plan" I am eligible to participate in....basically because I am not clear on what the IRS definition of "self employed" is. And please don't suggest that I visit the IRS website, I've already been there/done that.

I know someone on here has to have the right answer as this town is filled with independent contractors. I have always been a regular W2 employee in my previous jobs, this is my first time as an independent contractor - so I need help.

This is my info:

- independent contractor, 1099, pay quarterly taxes etc. My income is between $40K-$50K per year. I have the option to work from my home office or go to the office of the person that I work for.

- DH is W2, maxes out 401K.

-My goal is to reduce taxable income along with boosting retirement. I have a current IRA with about $200K in it (this is a compilation of my past 401ks rolled into IRA after I left the companies)

Am I eligible for SAR-SEP or Solo 401kK or something all together different?

TIA for your thoughts on this.