Self-employed individuals have various pension plan options to choose from, including Individual Retirement Accounts (IRAs), Simplified Employee Pension (SEP) plans, Solo 401(k) plans, and Defined Benefit plans. Each option has its own advantages and considerations, so it’s important to research and select the plan that best fits your retirement goals and financial situation.

An IRA allows self-employed individuals to save for retirement with tax advantages. There are Traditional IRAs, where contributions may be tax-deductible, and Roth IRAs, where contributions are made with after-tax dollars but withdrawals in retirement are tax-free. Self-employed individuals can contribute up to a certain limit each year, depending on their age and income.

A SEP plan allows self-employed individuals to contribute up to 25% of their net earnings from self-employment, up to a certain limit. Contributions are tax-deductible and grow tax-deferred until retirement. SEP plans are easy to set up and have minimal administrative requirements, making them a popular choice for self-employed individuals.

A Solo 401(k) plan is a retirement savings plan designed for self-employed individuals with no employees other than a spouse. It allows contributions as both the employer and employee, up to certain limits. Solo 401(k) plans offer a wide range of investment options and the potential for higher contribution limits compared to other retirement plans.

Defined Benefit plans are traditional pension plans that provide a fixed monthly benefit in retirement, based on factors such as age, earnings, and years of service. Self-employed individuals can contribute larger amounts to a Defined Benefit plan compared to other retirement plans, making it a good option for those looking to maximize their retirement savings and receive a guaranteed income in retirement.