Self-employment seems to be increasing, particularly during COVID-19.

People love the idea that they can create their own schedules and work from anywhere they like.

For self-employed people, finances can be complicated and confusing. A common question I get is "What happens to my retirement plan (401(k)." What if I don’t have a traditional employer span>? Can I still contribute?

There are many retirement plans for self-employed people. I will be showing you the one that allowed me to reach my $100k goal at 25 years old. It was a SEP IRA. Let's see if you didn't even know about this amazing thing, or how it works.

What is a SEP IRA exactly?

You should first know that SEP stands to Simplified Employee Pension. I don't know why they chose "simplified," as self-employment is anything but simple, despite being incredibly rewarding.

A SEP IRA is a retirement program for self-employed people. There are many types of retirement plans. There are many types of retirement plans.

There is one difference between a standard IRA or 401k account and a SEP IRA. A SEP IRA tends to have a higher contribution limit .

To put things in perspective, for 2020 the contribution limit for either a Roth IRA or a Traditional IRA is $6,000 Your annual contribution limit for a 401k is $19,500. The 2022 SEP IRA contributions limit is 25%* of your salary or $57,000, which is incredible.

Two small caveats are to be aware of.

*The 25% refers your net earnings. This is basically the amount listed on Schedule C income minus deductions. You cannot also use the 25% contribution rule if your net earnings exceed $285,000 Your maximum contribution would be $57,000

Here's the lowdown on a SEP IRA

First, it is important to know that unlike a Traditional IRA you don't have to pay taxes upfront. Instead, you can wait until after you retire and you start to withdraw your money. Only then, you will have to begin paying income taxes on distributions. The SEP IRA does not offer a Roth option.

The best part about the SEP IRA for me is the possibility to contribute if your side hustle is a lucrative one. You can contribute to your SEP IRA even if you're a freelancer or side hustler, as long as your contribution limits are met. This was how I was able open a SEP IRA even though I was still a W-2 worker.

There is a catch: If you have a SEPIRA, your ability to deduct personal contributions from the amount you currently hold may be different.

There are a few things you should know:

The best thing about a SEPIRA is that the investorspan type="font-weight 400 ;">, period. You are the one who directs everything. You also have 100% ownership, meaning that you are the owner of all assets.

You can't withdraw money from your account prior to the age 59.5. However, there is a 10% penalty for early withdrawals. And you must start withdrawing funds after the age 72. You could face a 50% penalty if you do not comply. OUCH!

Why it is important to save for retirement, especially for women

Retirement is the most expensive expense in your lifespan styling="font-weight 400 ;">, There's no way around it. There is more to investing than you might think when it comes to the wage gap. Statistics from this survey show that nearly all women want to remain self-employed. However, there is a 28% wage difference between women and men in the self-employment sector.

This is due to the fact that 40% percent of self-employed workers don't have a retirement plan. Help change the story by opening a SEP IRA, and sharing this information with other self-employed friends in the community.

I hope you found this explanation of SEP IRAs helpful. A SEP IRA can be a great way for self-employed people to have a successful retirement. You can track your progress with tools such as Personal Capital's Retirement Planner.

Personal Capital compensates Tori Dunlap ("Author"), for publishing the blog post. Additionally, in a separate referral arrangement between Author and Personal Capital Corporation ("PCC"), Author is paid $70 and $150 for each person who uses Author's webpage ( to register with Personal Capital and links at least $100,000 in investable assets to Personal Capital's Free Financial Dashboard. These arrangements allow Author to earn financial benefits by referring potential clients and/or being incentivized for posting blog content favorable to Personal Capital. The Referral Agreement does not result in any fees or other charges being charged to investors by Author and Personal Capital. Referred investors to PCC who then subscribe to investment advisory services offered by Personal Capital Advisors Corporation ("PCAC") won't be charged any additional management fees or similar compensation to Author or PCC. Further information on PCAC can be found in Form ADV Part 2A, which is available here.

Frequently Asked Questions

Can I add gold to my IRA?

Yes! You can include gold in your retirement plan. Gold is a great investment as it doesn't lose money over time. It also protects you against inflation. You don't even have to pay taxes.

Before investing in gold, you need to know that it's not like other investments. You can't purchase shares in gold companies, unlike stocks and bonds. Nor can you sell them.

Instead, you must convert your gold to cash. This means that you must get rid of your gold. You cannot just keep it.

This makes gold an attractive investment. Similar to other investments, gold can be sold at any time. That's not true with gold.

Worse, the gold cannot be used as collateral for loans. You may have to part with some of your gold if you take out mortgages.

What does that mean? You can't just keep your gold forever. You will have to sell it at some point.

However, there is no need to panic about it. You only need to open an IRA account. You can then invest in gold.

Is it possible to make money with a gold IRA.

If you want to make money on an investment, you need to do two things firstly, understand how the market operates, and secondly, know what kind of products are available.

Trading is not a good idea if you don’t know what you need.

Also, you should find the broker that provides the best service possible for your account type.

You can choose from a variety of accounts, including Roth IRAs or standard IRAs.

If you have other investments such as bonds or stocks, you might also consider a rollover.

What Should Your IRA Include in Precious Metals?

Protect yourself against inflation by investing in precious metals like gold and silver. It's not just a way to save money for retirement.

While silver and gold have seen significant increases in the last few years, they are still safe investments since they don’t fluctuate as often as stocks. These materials are in constant demand.

The prices of gold and silver are generally predictable and stable. They tend to increase when the economy is growing and decrease during recessions. This makes them very valuable money-savers and long term investments.

10% of your total portfolio should be invested in precious metals. You can increase this percentage if you want further diversification.

How can I choose an IRA?

Understanding your account type will help you find the right IRA. This will include whether you're looking for a Roth IRA or a traditional IRA. Also, you should know how much money is available for investment.

The next step in determining the right provider for your situation is to decide. While some providers offer both accounts, others specialize in only one.

Last, consider the fees associated to each option. There are many fees that vary between providers. They may include annual maintenance fees or other charges. One example is that some providers charge a monthly subscription based upon the number of shares you hold. Some providers charge only once a quarter.

Which type of IRA is the best?

It is essential to find an IRA that matches your needs and lifestyle when you are choosing one. You need to decide whether you want to maximize tax deduction on your contributions, minimize taxes now but pay penalties later, and if you just want to avoid taxes.

If you have little money to invest, the Roth option might make sense. The Roth option is also a smart choice if you work beyond the age of 59 1/2 and plan to pay income tax on any withdrawals.

The traditional IRA is better if you want to retire earlier because you will likely owe tax on your earnings. The Roth IRA is a better option if you plan to continue working well beyond age 65. It allows you to withdraw any or all of your earnings and not pay taxes.

Are gold IRAs a good place to invest?

You should buy shares in companies that produce gold. These companies can make you money by investing in precious metals and gold.

But, owning shares in direct form has two downsides:

If you hold on to your stock for too much time, you risk losing money. Stocks that fall are less than their underlying asset (like silver) and can end up losing more money. This means that you might end up losing more money than you make.

Second, waiting until the market recovers before selling can result in missing potential profits. Therefore, you might need patience and wait for the market recovery before making any profit from your gold investments.

Physical gold can be beneficial if you prefer to keep investments separate from your finances. An IRA with gold can diversify and protect your portfolio against inflation.

You can find out more information about gold investing on our website.


  • The maximum yearly contribution to an individual's IRAs is currently $6,000 ($7,000 for those 50 years or older), or 100% of earned income, whichever is less. (
  • Depending on your financial situation, most experts recommend you invest no more than 5% to 10% of your retirement funds in precious metals. (
  • If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal so that you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (
  • SEP-IRA”Simplified employee pension” For self-employed people like independent contractors, freelancers, and small-business ownersSame tax rules as traditional IRASEP IRA contributions in 2022 are limited to 25% of compensation or $66,000, whichever is less4. (

External Links

How To

IRA-Approved Precious Metals

IRA-approved valuable metals can be great investments. You have many options to diversify your portfolio, protect yourself against inflation, and from silver coins to gold bars, there are many.

Precious metal investment products come in two main forms. Physical bullion products such bars or coins are considered to be physical assets, as they exist in tangible form. However, exchange-traded fund (ETFs), which are financial instruments, track the price movement of an underlying assets, such as gold, and can be purchased directly from the company issuing them. ETFs are traded like stocks on stock markets, so investors can purchase shares directly from the company issuing them.

There are many precious metals to choose from. Gold and silver are often used for jewelry making and decorating, while platinum and palladium are more commonly associated with luxury items. Palladium tends be more valuable than platinum which makes them ideal for industrial use. Although silver is useful for industrial purposes it is preferred for decorative uses.

Due to the expense of mining and refining natural materials, physical bullion is more expensive. But, they are generally more secure than paper currencies and provide buyers greater security. Consumers may lose faith in the currency and seek out alternatives if the U.S. dollar falls in purchasing power. Physical bullion products, on the other hand, do not depend on trust between companies or countries. Instead, they are backed by governments and central banks, giving customers peace of mind.

The supply and demand for gold affect the price of gold. When demand increases, the price rises; conversely, when supply exceeds demand, the price drops. This dynamic creates opportunities for investors to profit from fluctuations in the price of gold. Physical bullion investors benefit because they have a greater return on their capital.

Unlike traditional investments, precious metals cannot be affected by economic recessions or interest rate changes. As long as demand remains strong, the price of gold will continue to rise. In times of uncertainty, precious metals can be considered safe havens.

The most sought-after precious metals are:

  • Gold – This is the oldest kind of precious metal. It is often called “yellow gold”. Gold is a common name, but it's a rare element that can be found underground. Most of the gold reserves in the world are located in South Africa.
  • Silver – After gold, silver ranks second in precious metals. Silver, like gold, is extracted from natural deposits. However, silver is more commonly extracted from ore than from rock formations. Because of its durability and malleability, as well as resistance to tarnishing, silver is widely used in commerce and industry. The United States produces over 98% of all global silver production.
  • Platinum – Platinum ranks third in the most valuable precious metals. It can be used to make high-end medical equipment, fuel cells, and catalytic converters. You can also use platinum in dentistry to make dental crowns and bridges.
  • Palladium – Palladium ranks fourth in the list of most valuable precious metals. Its popularity is growing rapidly among manufacturers because of its strength and stability. It is used in electronics and aerospace technology, as well as military technology.
  • Rhodium – Rhodium is fifth most valuable precious metal. Rhodium is a rare metal, but it is highly sought-after because of its use as a catalyst for automobile engines.
  • Ruthenium – Ruthenium ranks sixth in the list of most valuable precious metals. While there are only limited supplies of platinum and palladium, ruthenium is plentiful. It is used in the manufacture of steel, aircraft engines, as well as chemical manufacturing.
  • Iridium – Iridium is the seventh most valuable precious metal. Iridium is an essential component of satellite technology. It is used to construct orbiting satellites that transmit television signals, telephone calls, and other communications.
  • Osmium (Osmium) – Osmium has the eighth highest value precious metal. Osmium can withstand extreme temperatures and is commonly used in nuclear reactors. Osmium is used in medicine, cutting tools, jewelry, as well as medicine.
  • Rhenium – Rhenium has been ranked as the ninth most valuable precious metallic. Rhenium is used in refining oil and gas, semiconductors, and rocketry.
  • Iodine – Iodine is the tenth-most valuable precious metal. Iodine is used in photography, radiography, and pharmaceuticals.


By: Tori Dunlap
Title: SEP IRA
Sourced From:
Published Date: Sun, 04 Dec 2022 16:00:47 +0000

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