Start Planning Your Retirement Today
Although we all imagine a life of leisure during our retirement years, there are a number of "what ifs" that could dramatically change that blissful picture:
- What if you're still paying for a mortgage?
- What if Social Security is dramatically reduced or eliminated?
- What if you suffer a long-term illness?
Your individual retirement plan should match your goals with your risk tolerance and a balanced blend of investment vehicles.
- Traditional Individual Retirement Account (IRA) – Allows you to contribute an amount equal to your taxable compensation up to a maximum of $6,500 ($7,000 if you are 50 or older). Contributions may be tax-deductible depending on income, tax filing status and coverage by an employer-sponsored retirement plan. Qualified distributions are taxable as income.
- Roth IRA – Similar to a Traditional IRA except that contributions are not tax-deductible and qualified distributions are tax-free.
- Retirement Investment Accounts – Other savings or investment accounts earmarked for retirement.
As your own employer, you have the sole responsibility of funding your retirement. You have several options as a self-employed individual, including two IRAs that enable you to provide retirement funds for your employees as well.
- Solo 401(k) – Annual tax-deferred contributions up to a set maximum plus an additional 25% of self-employment income for business owners, up to a combined maximum. Additional catch-up contribution for those 50 or older.
- SEP IRA – Your annual contribution is 25% of your compensation up to a maximum of $56,000. Contributions are 100% tax-deductible and earnings grow tax-deferred. If you use a percentage of your compensation to calculate your retirement contribution, you must make contributions for your employees at the same percentage.
- SIMPLE IRA – This tax-deferred retirement plan is an option for small business owners with fewer than 100 employees. Contribute up to $13,000 annually with a catch-up limit of $16,000 for those 50 or older. Employers must match up to 3% of an employee’s contributions on a dollar-for-dollar basis.
A good employer-sponsored retirement plan can give your company a competitive edge in recruiting and retaining top-performing employees.
- Defined Benefit Pension – Allows employers to contribute money on a quarterly basis toward a predetermined retirement benefit for each employee based on age and compensation up to $225,000 per year.
- Profit Sharing Plan – Employers may make discretionary annual contributions into employee retirement accounts, cannot exceed the lessor of 100% of compensation or $56,000 for 2019.
- 401(k) Plan – Enables employees to defer taxes on annual contributions of up to $19,000 (as of the 2019 tax year). Those over 50 may make additional annual catch-up contributions of $6,000. Employers may make matching or non-elective contributions. Earnings accrue on a tax-deferred basis.
- 403(b) Custodial Account – Similar to a 401(k), this plan gives employees of educational, scientific, charitable or religious organizations an option to save for retirement while deferring taxes on contributions and earnings.
For businesses, nonprofits, and government agencies, Arvest Wealth Management offers specialized solutions and support that help you manage investments, oversee custodial accounts, and provide employee benefits.FIND A CLIENT ADVISOR