If you receive side income from a second job, now is the time to start adding to your retirement nest egg! Of course, this can get a bit tricky: based on the type of side work you perform, you need to evaluate which plan you need to open (if any) and how much money you can put into it.
The team at Hauk Kruse & Associates is here to give you a few pointers.
Types of retirement plans:
If both of your jobs are through employers that sponsor 401(k)s, you probably don’t need to open another retirement account, but it is important to check that you’re coordinating your contributions to the two plans.
If you receive side income from a consulting job or self-employment, you can either fund a solo 401(k) or a SEP-IRA. *It is important to know that just because a solo 401(k) is the best option for one year, it does not necessarily mean it is the best option for the next year.
How to determine how much money you can put into each of your plans:
For your 401(k) offered by your day-job or for a solo 401(k), you can put away $18,000 (or $24,000 if you are 50+ years old) in 2015, with a maximum of $53,000 for 2015.
The SEP-IRA is typically the best option for someone who has already maxed out a 401(k). For a SEP-IRA, you can put up to 20% of your net earnings, after subtracting the 1/2 of your Social Security and Medicare taxes that are deductible, with a maximum of $53,000 in 2015.
This marks the last Retirement Tuesday post! Please feel free to please contact our office at 314-993-4285 and talk to one of our CPAs if you have any questions on retirement!