Author Topic: Starting Additional Retirement Plan as Independent Contractor  (Read 1394 times)

Derrian

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Starting Additional Retirement Plan as Independent Contractor
« on: August 03, 2015, 06:02:55 PM »
I currently have two full time occupations: teacher and independent contractor. As a teacher I have access to a 403b and 457, which I contribute the maximum to each year. Additionally, I have a roth IRA that I max as well. I recently started working full time as a independent contractor and am looking for a place to put the money. As I do not have payroll taxes deducted, I would like to contribute it to some type of tax deferred account and was wondering if/how I can qualify for an individual 401k or SEP IRA. Anyone have any experience with this?

Derrian

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Re: Starting Additional Retirement Plan as Independent Contractor
« Reply #1 on: August 03, 2015, 06:38:35 PM »
Thanks for posting!

forummm

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Re: Starting Additional Retirement Plan as Independent Contractor
« Reply #2 on: August 03, 2015, 07:29:12 PM »
Good to know, thanks serpentstooth

457 403 consulting independent contractor solo 401k
https://www.bogleheads.org/forum/viewtopic.php?t=119974
« Last Edit: August 03, 2015, 07:31:19 PM by forummm »

johnny847

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Re: Starting Additional Retirement Plan as Independent Contractor
« Reply #3 on: August 03, 2015, 08:06:01 PM »
I currently have two full time occupations: teacher and independent contractor. As a teacher I have access to a 403b and 457, which I contribute the maximum to each year. Additionally, I have a roth IRA that I max as well. I recently started working full time as a independent contractor and am looking for a place to put the money. As I do not have payroll taxes deducted, I would like to contribute it to some type of tax deferred account and was wondering if/how I can qualify for an individual 401k or SEP IRA. Anyone have any experience with this?

You may not have payroll taxes deducted from the money you receive from your job as an independent contractor, but you still owe payroll taxes on that money. In fact, from your perspective, your payroll taxes will now double: you must pay the employee portion of 7.65% (same as a normal W-2 job) AND the employer portion of 7.65% (which is still being paid in the W-2 job case, it's just not you paying it). Contributing to any self-employed retirement plan does not reduce the amount of payroll taxes required. You must pay these in a timely manner, whether that's through extra withholding on your W-4's from your teaching job, or through estimated quarterly tax payments.