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No 401(k)? No Problem

No 401(k)? No Problem

Saving for retirement can be daunting, so it’s no surprise that employer-sponsored retirement plans can be a key stepping-stone into the world of investing—and to a healthy retirement nest egg.

That’s great for those with access to an employer-sponsored plan, such as a 401(k), 403(b) or 457 plan. But if you’re self-employed or without access to a plan at work, you might find it intimidating to figure out where to begin saving for the future.

The good news is that it’s not difficult or particularly time consuming to set up a retirement plan for yourself.

Here’s an introduction to some of your options. As you review them, keep in mind that there are fees and costs associated with all investment products and services, including retirement plans.

Traditional or Roth IRA

Regardless of where you work—whether you’re self-employed, have a side hustle, or even if your employer offers a retirement plan—you can save through individual retirement accounts, or IRAs. IRAs allow you to make tax-advantaged contributions to save for retirement. You can set up an IRA through a financial services company, such as a bank, brokerage firm or insurance company and can often do so online, quickly and easily.

The two primary types of IRAs are the traditional IRA and the Roth IRA. Furthermore, you can decide whether to invest in the choices made available by the plan custodian (generally stocks, bonds and mutual funds), or choose a self-directed plan offered by a custodian that allows investment in a broader set of assets.


There are two other IRA options: Simplified Employee Pension (SEP) IRAs and Savings Incentive Match Plan for Employers (SIMPLE) IRAs. Both follow the same rules as traditional IRAs but feature higher contribution limits. And both allow for traditional and self-directed investment options.

SEP IRAs and SIMPLE IRAs don’t feature Roth plans, but one advantage is that they generally take less time to establish and, as the latter plan's name suggests, they are indeed simpler. Want a Roth? You can contribute to a SEP or SIMPLE IRA and make regular, annual contributions to a Roth IRA.

SEP IRAs can be a good choice for the self-employed: You can contribute up to an annual cap or an IRS-determined percent of your self-employment net earnings, whichever is lower. SEP IRAs are not just for the self-employed. Any employer can start one using an IRS prototype with no start-up or operating costs.

You might run into a SIMPLE IRA if you work for a small company or startup. This type of plan lets employees and employers contribute to a traditional IRA the company has set up. Plans can be easily established using an IRS template. Employers can either match employee contributions or make a contribution to all eligible employees, based percentages set by the IRS.

The Solo 401(k)

Solo 401(k)s, also called owner-owned or self-employed 401(k)s, allow a business with no employees other than one’s spouse to contribute in two capacities: as the employee and as the employer. Under this framework, solo 401(k) plans allow most individuals to make higher contributions than they could through other self-employed retirement plans.

As with employer-sponsored 401(k) plans, individuals can choose either Roth plans or traditional plans. With Roth 401(k) plans, contributions are not tax deductible but once it's time to withdraw from the plan, distributions are tax-free. With traditional 401(k) plans, contributions are tax deductible, but distributions are taxed upon withdrawal.

Opening a solo 401(k) usually takes a bit longer to set up than an IRA, generally requiring consultation with an investment professional. To contribute for a given year, you must open the plan during that calendar year, though contributions to the plan can be made as late as your tax return due date in the following year.

Learn more about retirement accounts.