Retirement Plans for Barbers
If you are a barber, there is a strong chance that you do not have access to a retirement plan. This is probably because you are self employed. Fortunately for you, you do have access to a retirement plan. You actually have access to many options of retirement plans.
Traditional IRAs and Roth IRAs for Barbers
Traditional IRAs and Roth IRAs are available to all barbers regardless if you are self employed or if you work for a larger company. Both of these retirement plans allow you to invest up to $7,000 ($8,000 if over the age of 50).
Traditional IRAs allow you to contribute money pre-tax. This can be a good way to defer taxes down the road rather than paying them today. Please consult your CPA to see if this strategy is right for you.
Roth IRAs allow you to contribute money after taxes have been paid. The benefit here would be that you can allow the money inside of the Roth IRA to grow tax free. When you hit 59 and a half you do not need to pay taxes on the money that is pulled out. We do strongly recommend you consult your CPA to see if a Roth IRA is right for you.
One of the benefits to both of these is that you are not locked into putting money in. Contributing towards either of these accounts is voluntary. You are not penalized if you decide to not put money in one year.
SIMPLE IRAs and SEP IRAs for Barbers
SIMPLE IRAs and SEP IRAs are also retirement plans barbers can use to begin saving with. These plans can arguable be used to be more taxed optimized for your business.
Simple IRAs for Barbers
SIMPLE IRAs tend to be a good fit for business that have multiple employees (2-99 employees). It’s possible that you may be running a larger barbershop with multiple barbers in your business. You may feel the need to offer an retirement package for them. SIMPLE IRAs potentially can be a good solution.
The business is able to match your employees up to 3% of their base salary. The match you provide has tax benefits for your business. You as the business owner can list your self as an employee and take advantage of these benefits.
Please consult a CPA to see if a SIMPLE IRA is right for you and your business.
SEP IRAs for Barbers
SEP IRAs tend to be a good fit for self employed individuals who are looking to invest more outside of the Traditional IRA or Roth IRA. SEP IRAs have substantially higher contribution limits compared to Traditional and Roth IRAs.
We strongly recommend that you consult a CPA to see if a SEP IRA is right for you and your business.
Are Retirement Plans for Barbers Expensive?
All of these plans have considerably low administrative costs compared to a traditional 401k plan, typically used for very large businesses.
At IntelliVest Wealth Management, we do not charge to set up these accounts. We simply charge our standard fee on the assets under management. To learn more about fee only advisors click here.
Want to learn more?
IntelliVest Wealth Management has helped many barbers and barbershops set up these accounts for their businesses. If you are interested in learning more please give us a call for a free consultation. You can contact us here.
Disclosure
IntelliVest Wealth Management is a Registered Investment Advisor Headquartered in Spartanburg South Carolina. This is not a solicitation or financial advice. This article should only be used for educational purposes. Please consult with IntelliVest Wealth Management about your personal financial situation.
