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IRA for Self Employed (EVEN BETTER THAN A 401K!) - YouTube
Channel: It's Your Girl Rose
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if you're a freelancer or solopreneur of
any kind then this video is for you
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so all you real estate agents models
digital nomads consultants coaches yoga
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teachers and anyone who really makes a
1099 income I'm talking to you
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this video will also apply to you if you have a full-time job that you have a side gig
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on the side so I'd get on a side a side
gig that brings in 1099 income listen if
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you're self-employed I feel you I used
to have a 401 K back when I was working
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in corporate and it was nice because I
got an employer match and you have you
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know something to help you out
to save for retirement but when you're
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self-employed you're completely on your
own but ever since I started working for
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myself I figured out that there are
other ways to save and invest for the
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future
so just because you don't have a 401 K
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does not mean you're screwed
so if you want to learn more about how
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to use IRAs and take full advantage of
all the tax friendly ways to help you
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save for retirement as a solopreneur or
self-employed individual then keep
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watching hey and before we get started
go ahead and hit that subscribe button
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my channel is all about money and
investing for beginners and I know it's
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gonna help you learn a ton so make sure
to hit subscribe and hit the
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notification bar for new videos every
week if you're self-employed there are
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two types of IRAs you need to have the
first type is either a Roth or a
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traditional IRA everyone whoever you are
whether you're self-employed or you work
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for a company is allowed to have a Roth
or a traditional IRA they're both
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amazing ways to stay for retirement and
there's really no reason not to take
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full advantage of them so the first step
for you as a self-employed individual is
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to open a Roth IRA or a traditional IRA
both types give you tax benefit but you
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get the tax benefits of the Roth on the
back end and you get the tax benefit of
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the traditional on the front end or a
more in-depth explanation of the
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difference between a traditional and a
Roth IRA then be sure to check out this
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video right here once you open either a
Roth or traditional IRA the second type
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of IRA you need to have is the SEP IRA
most people who have corporate jobs get
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a 401k with their employer but for you
since you don't have a 401k what you can
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do instead is to open a SEP IRA which
stands for simplified employee pension
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deaf IRAs allow you to put away up to
twenty-five percent of your income or
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fifty six thousand dollars whichever is
lower and that's
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five percent of your net income so after
the expenses that you report so let's
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say you make a hundred thousand dollars
of net income in one year then you can
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contribute twenty five thousand dollars
into your step IRA that year twenty five
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percent the best part is that you can
write off any contributions you make to
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a SEP IRA so it's a really good way to
reduce the taxes you have to pay every
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year it's like why pay any more taxes
than you need to contributing to my SEP
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IRA saves me thousands of dollars in
taxes every year not to mention it helps
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me save some serious bucks for
retirement I've talked to way too many
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freelancers and solopreneurs who aren't
doing anything to prepare for retirement
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and I know it's a really long way off
but there's no corporation that's gonna
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do it for you so you really need to
think about your future and take
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advantage of any tax loopholes and ways
that the government gives you to help
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you prepare so ideally you have a SEP
IRA and you have another IRA either a
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Roth or traditional and you are maxing
out your contributions to both now if
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you're a full-time employee and you have
a 401k but you also make income on the
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side as a solopreneur then you are a lot
to have a SEP IRA as well but tax laws
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are pretty complicated and there's
always exceptions and what not giving
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your specific situation so the only way
to know for sure is to talk to your
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accountant but in general you are
allowed to have both the 401k and the
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SEP IRA as long as you stay within the
total annual contribution limit as of
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2019 you're allowed to put up to fifty
six thousand dollars per year tax-free
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into your step IRA and or 401k combined
there are other retirement savings
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options for self-employed people but in
my opinion they aren't as good as the
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SEP IRA the simple IRA is another option
but the annual contribution at $12,500
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versus the step IRAs fifty-six thousand
dollars is a lot lower so the simple IRA
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is a much less popular option than the
set and another option is the solo 401k
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but those require a lot more paperwork
and similar administrative stuff that a
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SEP IRA doesn't have so in general it's
not really worth the hassle to have a
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solo 401k over a SEP IRA unless you're
over 50 years old and that's because the
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solo 401k lets you do what's called
catch-up contributions now I'm not gonna
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get into the specifics of Scylla 401ks
in this video but just
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know that if you're self-employed and
you want to be able to save a ton of
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tax-free money for retirement and keep
your investments in a tax ID account a
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SEP IRA is a super easy and hassle-free
option to open a SEP IRA all you have to
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do is choose a brokerage that offers the
SEP IRA as an account option I currently
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have my SEP IRAs adela t and I love it
but there's a lot of other really great
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brokerages out there to choose from
Vanguard is great for anyone who wants
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to invest in index funds although
fidelity is good for that too betterment
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is another option you can look into it's
a Robo advisor that offers
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professionally designed investment
portfolios that you can choose from and
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then customized for your goals and your
risk tolerance the interface is super
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nice and easy to use other brokerages
that offer stuff IRAs are TD Ameritrade
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e Trade Charles Schwab and Interactive
Brokers if you learn something from this
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video please give it a thumbs up and
feel free to let me know in the comments
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if you have any questions and I'll be
sure to get back to you once you've set
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up your step IRA and you want some ideas
on what to do with it check out these
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two videos right here for some beginner
friendly info on how to start putting
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your money to work and of course if
you're new to the channel be sure to hit
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that subscribe button for new money and
investing videos every week always
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remember to go after your dreams
unapologetically and to live life on
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