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Saving for retirement when self-employed

Key takeaways

  • When you’re self-employed, you can save for retirement with tax-advantaged accounts like a SEP IRA, self-employed 401(k), SIMPLE IRA, or Fidelity Advantage 401(k)
  • A health savings plan (HSA) is another potential option for long-term savings, particularly since savings are not use it or lose it and can grow over time. 
Freelancers and small business owners need to be especially proactive about setting aside money for the future. This includes longer-term savings goals like retirement. 

Self-employed retirement plans

Whether you’re planning to retire early or keep working well past traditional retirement age, you’ll need savings at some point. The good news is that being self-employed gives you access to certain tax-advantaged retirement accounts with high contribution limits that can get you saving now. Here are some options to consider: 
  • SEP IRA 
A Simplified Employee Pension or SEP IRA offers tax-deferred growth for individuals or small businesses with 1 to 4 employees, while allowing contributions up to $69,000 for tax-year 2024. To learn more, read Understanding the SEP IRA.
  •  Self-employed 401(k) 
If it’s just you or you and a spouse working for your business, a self-employed 401(k) lets you put aside money tax-deferred or tax free. It features higher contribution limits—up to $69,000 for tax-year 2024—since you can contribute both as an employer and employee. To learn more, read Understanding the Self-Employed 401(k)
A Savings Investment Match Plan for Employees (SIMPLE IRA) is a plan for businesses with fewer than 100 employees. Contribution limits are much lower than those of a self-employed 401(k) and SEP IRA. To learn more, read Understanding the SIMPLE IRA.      
  • Fidelity Advantage 401(k)  
The Fidelity Advantage 401(k) is a pooled employer plan designed specifically for growing small businesses. It features all the benefits of a 401(k) plan such as higher contribution limits and an employer match,1 with a simplified plan design and reduced administrative responsibilities. To learn more, explore Fidelity Advantage 401(k).      
If you’re not ready to open a plan for your business, consider saving for retirement in a traditional IRA or Roth IRA until you’re ready to take the next step as an employer. To learn more, read What is an IRA.     

Not sure which plan is right for you?

Take our 5-minute quiz to compare small business retirement plans and find the right fit for your situation. Compare plans now 

Saving for retirement with an HSA

If you’re enrolled in an HSA-eligible health plan, another long-term savings option to consider when you’re self-employed is a health savings account (HSA). You'll save 15.3% in tax on any contributions since you're paying as both employer and employee. Benefits include: 
  • Triple tax advantages2 – Your HSA contributions can be tax-deductible, you can spend your money on certain medical expenses tax-free,3 and any growth is tax-free too. 
  • It's investable – Investing your unused HSA money may be something to consider to help take the sting out of retirement health care costs. 
  • It's your money – Your savings aren’t “use it or lose it”—your money can accumulate year over year. Keep your HSA if you move or change insurance. 

Are you a small business owner?

Find out which small business retirement plan could be right for you.

More to explore

1. The Fidelity Advantage 401(k) requires participating employers to make safe harbor matching contributions to the plan. 2. With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation. 3. Spending HSA money is tax-free when used to pay for qualified medical expenses.

Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.

This information is general in nature and provided for educational purposes only.

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