Work To The Wise

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Advantages of SEP IRA Plans for Freelancers

Picture of dollarsIf you’re self-employed, you may think that a regular IRA plan is your only retirement savings option. But there’s something else you may not even know exists: the SEP IRA (Simplified Employee Pension) Plan. And it offers some real advantages to freelancers.

In order to qualify for an individual SEP IRA, you must be self-employed in some way. That could mean owning your own business (with real live employees). But the good news is that it also applies to those of us who earn a living as hard-working freelancers / sole proprietors.

What’s special about a SEP IRA plan?

While the SEP plan offers a lot of the same features of a traditional IRA, it also comes with some nice advantages:

Some of the similarities

  • Easy to set up with the help of your banker or broker
  • Tax deductible
  • Your money grows tax-deferred until needed
  • Withdrawals before 59 1/2 taxed as regular income and subject to 10% penalty for early withdrawal
  • Withdrawals after 59 1/2 are taxed at your then current rate, but no withdrawal penalty
  • Required minimum distributions by age 70 1/2

Some of the key advantages of a SEP

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Freelancing Basics: How To Earn Extra Money Freelancing

Picture of dollarsWhen people think about ways that they could earn extra money freelancing, the initial idea can feel overwhelming. And the picture in their head of what it might look like is just too vague. Or maybe it conjures up too many hurdles. And too many chances to fail.

I call that process thinking. Getting caught up in the details of “how to” instead of simply setting your mind on “Let’s get started. I’ll find a way.” Process is important. In fact, it can be critical. And we’ll get to that soon.

But first comes the vision of what it is you want to create. The other details will fall in place as you go along. Plus having a clear vision, will help you when obstacles pop up. They always do.

Choosing a freelancing specialty

Unless you already know exactly what you want to do, this part can take some time to materialize. And it’s worth giving yourself that time. Think of it as the first step in turning the idea to earn extra money freelancing into an actual business.

Some general areas for you to think about to help you come up with possible independent contractor (freelancing) businesses: [Read more…]