Self employed retirement plans are an important consideration for many, and understanding the available options can be essential. There are four main types of retirement plans for the self employed, and these are a SEP IRA account, a SIMPLE plan, a solo 401k, and a Keogh. Each of these has specific advantages and possible drawbacks or restrictions, and while one choice may be ideal for some no one plan will be perfect for every self employed individual. A SEP IRA is a simplified employee pension plan, and this is basically a traditional IRA but one that allows for contributions which are much higher. This is one of the most popular self employed retirement plans for many individuals, and each plan participant covered will have a separate IRA account.

One of the small business 401k plans is the SIMPLE plan. This is a Savings Incentive Match Plan for Employees, and it is a compensation deferral plan which functions the same way as an employer sponsored 401 k plan. This is one of the lowest cost self employed retirement plans, and has small expenses if any to establish an account. With a Simple plan an employer match is required, and this match may range from one to three percent, and the account is immediately vested as soon as it is established. This is also true with a SEP IRA, and it is important to get 401k investment advice before making any final decisions if there is any uncertainty or confusion.

Solo 401k plans are only intended for a self employed business owner and spouse. This means that if there are any other employees of the company this plan may not be the best choice because of the limited coverage options. A self directed 401k allows the account holder many more investment choices, but can also carry higher risks. Keogh plans date back to 1962, and these accounts can involve more than one component. There are several self employed retirement plans to choose from, and each may provide a number of benefits. Some of these plans have more restriction in place than others concerning allowable contribution amounts and eligibility requirements. The variety means that any self employed individual can find the right retirement account to fit their specific needs, which has not always been the case.