A SEP IRA (Simplified Employee Pension Individual Retirement Account) is a retirement savings plan that allows self-employed individuals and small business owners to contribute tax-deductible contributions to their retirement account.
SEP IRA contributions are tax-deductible, meaning they can reduce your taxable income for the year in which you contribute. Additionally, SEP IRA contributions can grow tax-deferred until withdrawal, providing a potential source of retirement income.
As a freelancer, you are self-employed, and therefore eligible to open a SEP IRA account. SEP IRA contributions are also generally larger than traditional or Roth IRA contributions, as you can contribute up to 25% of your net earnings from self-employment—with yearly maximum limits.
👋 Psst...Have you seen the all-new Feedcoyote yet? They've got a new look, more freelance opportunities, and the best collaboration tool for freelancers! Join over 100,000 fellow freelancers who network, find clients, and grow their business with Feedcoyote. Join for Free »
In summary, a SEP IRA can be a great retirement savings option for freelancers as it provides a tax-advantaged way to save for retirement and allows for larger contributions than traditional or Roth IRAs. However, it’s important to note that there are other retirement savings options available, such as a Solo 401(k) or SIMPLE IRA, which may be more suitable for certain freelancers depending on their individual circumstances.
See also: Traditional IRA, Roth IRA, Simple IRA, Solo 401K