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. What are the 2014 401(k) contribution limits?

    Learn how limitations for 401(k) plans can change; find out what the contribution limits, annual limits and compensation ...
  2. How do I set up a 408(k) plan in my business?

    Understand the necessary steps for setting up a 408(k) retirement plan, and get an overview of the SEP and SIMPLE plan options ...
  3. What are qualified retirement plan types?

    Understand the different types of qualified retirement plans and what they mean in terms of employee and employer contribution ...
  4. How does a qualified retirement plan early distribution work?

    Weigh the pros and cons of taking an early distribution from a retirement account. Most early distributions are subject to ...
RELATED TERMS
  1. Adverse Domination

    A legal doctrine that allows regulators to bring litigation against ...
  2. Entitlement Offer

    An offer to purchase a security or other asset that cannot be ...
  3. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  4. Employer's Liability Insurance

    A product for employers that protects them from major financial ...
  5. Variable Annuitization

    An annuity option in which the amount of income payments received ...
  6. Strategic Management

    The management of an organization’s resources in order to achieve ...
comments powered by Disqus
Related Articles
  1. Top Financial Frights: Emergencies & ...
    Investing Basics

    Top Financial Frights: Emergencies & ...

  2. When Is A Franchise The Right Investment ...
    Investing Basics

    When Is A Franchise The Right Investment ...

  3. Steps To Retiring With A Reverse Mortgage
    Retirement

    Steps To Retiring With A Reverse Mortgage

  4. When Your Job Offers An Awful Retirement ...
    Retirement

    When Your Job Offers An Awful Retirement ...

  5. Top 5 Strategies To Pay For Elder Care
    Retirement

    Top 5 Strategies To Pay For Elder Care

Trading Center