The Self Employed Trader

 

OUTSIDE THE BOX: Understanding Pension Plans for the Self-Employed Trader

By Jeff Neal, Optionetics.com 11/15/2006 12:00:00 PM As a self-employed trader it is important to understand your pension plan alternatives—after all, no one looks out for your interests except you. This is why it is critical that the self-employed trader takes an active role in funding their retirement. If self-employed traders do not do so then they will be forced to survive on only their personal investments and Social Security when they retire. The self-employed trader can contribute to either a Keogh plan or simplified employee pension plan, also known as a SEP. Both these accounts allow the participant to take tax-deductible contributions, which can be invested in a variety of investment instruments such as stocks, bonds, mutual funds and certificates of deposit. The key advantage is that the earnings from these investments can compound, tax deferred. Of course, as with other retirement plans, the individual must pay a 10 percent penalty and income taxes if they withdraw funds from a self-employment retirement plan before age 59 and one-half. This is why it is essential that only funds not needed for expenses or emergencies be invested. Click here for full article Jeff Neal Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent Visit Jeff's Forum Listen to Jeff at www.ProfitStrategiesRadio.com