A:

It depends. If your business is unincorporated, and you have net earnings from self-employment, you are eligible to establish and fund a retirement plan, including a SIMPLE IRA, based on that income. The IRS defines net earnings from self-employment as gross income from your trade or business minus allowable business deductions. If your business is incorporated, you may establish a retirement plan for the business and your contributions will be based on W-2 wages you receive from the business.

IRS publication 560 includes a definition of net earnings from self-employment as well as other important information about establishing a retirement plan for your business.

(For further reading, see IRA Contributions: Eligibility and Deadlines, Plans the Small Employer Can Establish and Simple IRA Tutorial.)


This question was answered by Denise Appleby
(Contact Denise)

Hot Definitions
  1. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  2. Sharpe Ratio

    The Sharpe Ratio is a measure for calculating risk-adjusted return, and this ratio has become the industry standard for such ...
  3. Death Taxes

    Taxes imposed by the federal and/or state government on someone's estate upon their death. These taxes are levied on the ...
  4. Retained Earnings

    Retained earnings is the percentage of net earnings not paid out as dividends, but retained by the company to be reinvested ...
  5. Demand Elasticity

    In economics, the demand elasticity refers to how sensitive the demand for a good is to changes in other economic variables. ...
  6. Dark Pool

    A dark pool is a private financial forum or exchange for trading securities.
Trading Center