⭐️ Open A SEP IRA Today With M1 Finance!

So you’re looking to contribute some money towards your retirement as an entrepreneur and you’ve heard of the SEP IRA?

In this video, I’ll show you:
How to contribute over $60k into this account every year
The requirements you need to meet in order to do so (income rules)
Walk you through exactly how to do it step-by-step

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A SEP IRA, or Simplified Employee Pension Individual retirement account, is a popular retirement savings vehicle for self-employed individuals and small business owners. One of the key benefits of a SEP IRA is the ability to contribute a significant amount of money each year, which can help individuals save for retirement while also reducing their taxable income. In fact, the contribution limits for a SEP IRA are among the highest of any retirement plan, making it an attractive option for those looking to maximize their retirement savings.

For the 2021 tax year, the maximum contribution limit for a SEP IRA is 25% of the employee’s compensation, up to a maximum of $58,000. However, for individuals who are self-employed, the calculation of the maximum contribution limit is a bit more complex. Self-employed individuals must calculate their “net earnings from self-employment” in order to determine their maximum allowable contribution.

For example, let’s say a self-employed individual has a net income of $200,000 for the year. In this case, the maximum contribution limit for the SEP IRA would be 20% of the net income, which is $40,000. However, there’s an additional catch-up contribution for those who are over 50 years old. For these individuals, they can contribute an additional $6,500, bringing the total maximum contribution limit to $46,500.

In order to contribute the full $58,000 (or $64,500 for those over 50), the self-employed individual would need to have a net income of $280,000. While this may not be feasible for everyone, for those who are able to reach that level of income, it can be a great way to maximize their retirement savings while reducing their tax liability.

There are a few important things to keep in mind when contributing to a SEP IRA. First, contributions must be made by the tax filing deadline, including extensions. This means that self-employed individuals have until the tax filing deadline (usually April 15th) to make their contributions for the previous year. Additionally, contributions to a SEP IRA are generally tax-deductible, which can provide significant tax savings for individuals who contribute the maximum allowable amount.

In conclusion, a SEP IRA can be a powerful tool for self-employed individuals and small business owners to save for retirement. With a maximum contribution limit of $58,000 (or $64,500 for those over 50) for the 2021 tax year, it offers the opportunity to contribute a significant amount of money each year while also reducing taxable income. For those who are able to reach the maximum contribution limit, a SEP IRA can be an excellent way to build a substantial nest egg for retirement.