Deadline approaching for Self-Employed Retirement Plan Contribution

Simple Contributions

Timing “When do I need to make my SIMPLE Retirment Contribution by for 2019”?

Salary reduction contributions to a SIMPLE must be made to the financial institution no later than January 30.

Benefits “How much can I contribute to my SIMPLE IRA”?

A SIMPLE is a good alternative for a self-employed individual as an alternative to an Individual Retirement Account or a SEP, (Simplified Employer Plan) as the SIMPLE affords a greater contribution for those with net earnings of less than $65,000. A self-employed individual with employees would have to offer participation to those employees and contribute 3% of compensation on their behalf.

Nevertheless, for the self-employed with no employees, the maximum elective contribution for 2019 is $13,000.In addition, for those over 50 years of age, an additional $3,000 can be contributed.For example, assuming the net earnings are $20,000, 50 years of age, SIMPLE contribution = $13,000, Catch-Up contribution $3,000, employer contribution, $600.After the deduction for these contributions, the taxable income is $3,400, ($20,000 – $13,000 – $3,000-$600).

Again, to afford the benefit of the SIMPLE the elective deferrals and the employer contribution must be made by January 30, 2020.

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