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A little-known retirement plan for solo entrepreneurs

The self-employed or solo entrepreneurs can create a SEP IRA, which is what is often suggested. There are other lesser known options such as a solo 401(k). A Solo 401(k) can allow for a self-employed person to put up to $53,000, or $59,000 for those over the age of 50, into tax-advantaged savings.

Tax advantaged savings means pre-tax savings like a traditional 401(k), Roth 401(k) or after tax savings that can later be converted to Roth 401(k).

The employee and employer makes a total contribution of up to the lessor of $53,000, $59,000 for those over the age of 50, or 100% of compensation. Note that not all of the contributions are deductible.

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