The Basics of Self Employed 401ks

September 23, 2010 – One of the greatest American innovations when it comes to personal financing is the 401k. Opening a 401k account is a great way to save for your retirement. Unfortunately for those who are self-employed, traditional 401ks are only offered to employed individuals. Of course, this is only for traditional 401k accounts. Fortunately, there are other types of 401k accounts that can accommodate people who are curious on opening an account, but are self employed. For these type of people, the perfect 401k account is the self employed 401k.

So what is a self employed 401k account? This is basically a 401k account that doesn’t require you to be an employee of a company. This is the best type of 401k account for people who run their own business or those who have a business but don’t have required number of people to open a company 401k group plan. Self employed 401ks work the same way as traditional 401ks. The only difference is that since you are not working for anyone but yourself, you will not get any type of employer match for you contributions. Some employers contribute to their employees’ accounts, matching whatever their people put in. Since you are your own employer, this will not be applicable.

If you want to open a self employed 401k account and start accumulating wealth, these are offered in different financial institutions. Of course, the details of the accounts differ based on the FIs. This mainly pertains to the make-up of the mutual funds you can put your contributions in to. Since FIs assess stocks differently and have different investing consultants, mutual fund make could substantially differ based on the FI offering the account. Always do a little research before you commit to opening an account. Make sure the funds you like are available in your account.

 

 

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