Withdrawals: The IRS sets no withdrawal restrictions on standard brokerage accounts.Your deposits are after-tax, and you'll incur taxes annually on realized earnings, interest, and dividends. Overview: A standard brokerage account is easy to set up and use but offers no tax advantages.Risks/limitations: As with any investment account, the securities in your solo 401(k) could lose value.If you need the cash early, your plan may allow you to borrow limited amounts without penalty. Unless you qualify for an exception, you may pay a penalty for withdrawals before age 59 1/2. Withdrawals: Under the solo 401(k) rules, withdrawals are taxable.Employer contributions are capped at 25% of your net self-employment income. Employee contributions follow the normal 401(k) annual limits, including catch-up contributions. You can contribute to your own account as an employee or employer, which makes for high contribution limits. The tax structure mimics a standard 401(k) - contributions are tax-deductible and earnings are tax-deferred. Overview: You can save for retirement in a solo 401(k) if you are a sole proprietor or independent consultant with no employees.If you have an unexpected illness before retirement, you may have to sell those securities earlier than you'd like to pay your medical bills. Risks/limitations: You can invest your HSA funds in securities just as you would with an IRA or 401(k).After your 65th birthday, the penalty goes away, and you'll only pay taxes on non-medical HSA withdrawals. Non-medical withdrawals are subject to taxes and a 20% penalty until age 65. Withdrawals: You can take tax-free withdrawals from your HSA at any age to pay for medical expenses.HSA contributions are tax-deductible, and investment earnings are tax-deferred. You are only eligible for an HSA if you have a high-deductible health plan. Overview: A health savings account, or HSA, is an investment account that helps you pay for medical expenses.If you contribute 10% of your own salary to your account, you must also contribute 10% of your eligible employees' salaries. Risks/limitations: With a SEP IRA, you must make equal contributions, in terms of percentage of salary, to all eligible employees.Early withdrawals before the age of 59 1/2 are subject to taxes and penalties unless you qualify for an exception. Withdrawals: Qualified SEP IRA withdrawals in retirement are taxable as ordinary income.The contribution limits are very high, but there are no extra catch-up contributions when you turn 50. Your SEP IRA contributions are funded by your business, and they are tax-deductible if you're self-employed. Overview: The SEP IRA is a retirement investment account designed for small business owners and the self-employed.The contribution limits are low relative to a 401(k), and they may be zero if you earn a high salary. Risks/limitations: The IRS sets maximum income thresholds and dollar limits on Roth IRA contributions.Also, five years must have passed since you made your first Roth contribution. To avoid taxes and penalties when you withdraw earnings from a Roth IRA, you normally must be age 59 1/2 or older. Withdrawals: You can withdraw your contributions from a Roth IRA at any time.Your investment earnings are also tax-free if you follow the withdrawal rules. You don't get a tax deduction on your contributions, but qualified withdrawals in retirement are tax-free. Overview: A Roth IRA is a retirement investment account that's funded with after-tax dollars.These limits are low compared to 401(k) contribution limits. Risk/limitations: The IRS caps annual contributions at $6,000, with an additional $1,000 catch-up contribution allowed if you're 50 or older.Also, the IRS requires you to take required minimum distributions (RMDs) starting at age 72. You'll pay a penalty on top of the taxes for withdrawing funds prior to age 59 1/2 unless you qualify for an exception. Withdrawals: Your qualified withdrawals in retirement are taxed as ordinary income.Your contributions up to an annual limit are tax-deductible, and your investment earnings are tax-deferred. You can open a traditional IRA online in minutes at financial institutions such as Charles Schwab ( NYSE:SCHW), Fidelity, or Betterment. Overview: The traditional IRA is a tax-advantaged investment account.Here are eight ways to save for retirement without a 401(k). You have options ranging from tax-advantaged accounts to taxable investments that can grow in value over time. workers don't have a 401(k) available through their employer.įortunately, the 401(k) isn't the only way to save for retirement. One of those limitations is access - some 40% of U.S.
The traditional 401(k) has its limitations. Looking for alternatives to a 401(k)? You're not alone.
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