I am retiree, drawing from my 403(b) annuity. I am the sole employee of my own business. Do I qualify for a SIMPLE IRA account? I want to defer some of my income from taxes.

By Denise Appleby AAA
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)

RELATED FAQS

  1. Places where I can open an IRA Account?

    Open an IRA through brokerage firms, mutual funds, banks and other major financial institutions, or through large Internet ...
  2. What does a merger or acquisition mean for the target company's employees?

    Learn about the likely impacts of a mergers & acquisition deal on the target company's employees, their benefits and adjusting ...
  3. Is there a way to invest in the income effect?

    Learn how to invest in the income effect. Explore the possible sectors where the income effect results in higher earnings ...
  4. What is the best form of equity financing for a start-up company?

    Learn the equity financing options available to small business, and understand the best equity options for companies during ...
RELATED TERMS
  1. Business Judgment Rule

    A legal principle which grants directors, officers, and agents ...
  2. Contingent Annuitant

    Someone designated by an annuitant to receive the annuitant’s ...
  3. Freelancer

    A freelancer is an individual who earns money on a per-job or ...
  4. Living and Death Benefit Riders

    Living and death benefit riders are a descriptive class of contractual ...
  5. Annuity

    A financial product that pays out a fixed stream of payments ...
  6. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...

You May Also Like

Related Articles
  1. Investing News

    A New Corporate Governance Initiative ...

  2. Mutual Funds & ETFs

    Should GE Be Part of Your Portfolio?

  3. Retirement

    Top 10 Stocks for Retirement Portfolios

  4. Trading Strategies

    Top 7 Roth IRA Stocks for 2015

  5. Entrepreneurship

    How To Expand Your Business Internationally

Trading Center