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What to know about retirement if you're self-employed

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Contributions to a Roth IRA aren't tax-deductible, but earnings in the account are tax-free and withdrawals are tax-free in retirement after age 59½.

SIMPLE IRA

A savings incentive match plan for employees (SIMPLE) IRA is available to self-employed business owners with 100 or fewer employees. Like individual 401(k)s, SIMPLE IRA contributions include employee and employer contributions. However, they're easier to administer10—partly because there's no requirement to file a tax return for the plan.

For tax year 2022, self-employed individuals can contribute up to $14,000 to a SIMPLE IRA11 ($17,000 if age 50 or older at the end of the calendar year) before the employer contribution.

Then the employer must make one of the following additional contributions:

  • 1.3% match of each plan participant's salary, or
  • 2.2% of each employee's salary, whether or not they contribute.

The employee must make contributions within 30 days of the end of the tax year. The employer must deposit contributions by the tax deadline, including extensions. So employer contributions are due March 15 or April 15, depending on how your business is structured if the business doesn't extend its return, or September 15 or October 15 if it does.

A SIMPLE IRA is a good option for a small business with employees. Some business owners start with a SIMPLE IRA and switch to a 401(k) plan when they have more employees.

If you want to open a new retirement account or have questions about the best ways to contribute given your particular situation, reach out to your Synovus financial advisor. They can determine a retirement saving strategy that is most appropriate for you.

Important disclosure information

  1. U.S. Department of Labor, “The Employment Situation—April 2022," published May 6, 2022, accessed June 1, 2022. Back
  2. IRS.gov, “Distributions from Individual Retirement Arrangements (IRAs)," published April 25, 2022, accessed June 1, 2022. Back
  3. IRS.gov, “IRS Announced Changes to Retirement Plans for 2022," updated November 17, 2021, accessed June 1, 2022. Back
  4. IRS.gov, “How Much Can I Contribute to My Self-Employed SEP Plan if I Participate in My Employer's SIMPLE IRA Plan?" updated November 8, 2021, accessed June 1, 2022. Back
  5. IRS.gov, “SEP Plan FAQs," updated May 24, 2022, accessed June 1, 2022. Back
  6. IRS.gov, “One-Participant 401(k) Plans," updated November 8, 2021, accessed June 1, 2022. Back
  7. AARP, "Self-Employed 401(k) Contributions Calculator," updated May 2022, accessed July 24, 2022. Back
  8. IRS.gov, “Form 5500-EZ," 2021, accessed June 1, 2022. Back
  9. IRS.gov, "Publication 560," updated March 30, 2022, accessed July 24, 2022. Back
  10. Forbes Advisor, “SEP IRA vs Solo 401(k): Which Should You Choose?" updated December 20, 2021, accessed June 1, 2022. Back
  11. IRS.gov, “Retirement Topics – SIMPLE IRA Contribution Limits," updated November 8, 2021, accessed June 1, 2022. Back