Overdrive Magazine | Trucking Business News & Owner Operator Info
Issue link: http://read.dmtmag.com/i/165354
Saving for retirement – except under special circumstances – without incurring a hefty penalty. mulate tax-deferred. When you withdraw the money, it's tax-free. ROTH IRA. The differences between SIMPLE IRA. The SIMPLE (Savings a traditional IRA and a Roth IRA are the terms of contributions and payout. With a Roth IRA, contributions are not deducted from income, but they do accu- Incentive Match Plan for Employees) IRA was designed for companies with fewer than 100 employees, and as the owner of a small trucking business, you and your www.vdoroadlog.com Protect your CSA scores with RoadLog™ EOBR. VDO and RoadLog – Trademarks of the Continental Corporation Text INFO to 205-289-3555 or visit www.ovdinfo.com Soon EOBRs or ELDs will be required by law in the US. VDO RoadLog is the easy and affordable Electronic Logging Device, designed to keep you in compliance. RoadLog helps protect your CSA scores, so that you qualify for the most profitable loads. • No monthly fees • Plug and play installation • Built-in printer for rapid roadside checks • FMCSA compliant For additional information, call: (855)-ROADLOG or e-mail: roadlog-sales@vdo.com 54 | Overdrive | September 2013 CO1679 Overdrive_OO_RoadLog_halfP_9-13_V2.0.indd 1 Untitled-24 1 PIB_0913.indd 54 employees qualify. Under a SIMPLE IRA arrangement, an employee of your business can contribute and be matched by you up to $12,000 in 2013, with a $2,500 catch-up contribution limit for those 50 and older. Similar penalties are applied upon early withdrawal. SEP IRA. A Simplified Employee Pension plan allows an employer to contribute up to 25 percent of net income (up to $51,000 total) to an IRA set up for himself and/or his or her employees. After money is put into the plan, it must stay there until you're 59.5. Early withdrawals are subject to federal income taxes and a possible 10 percent penalty. INDIVIDUAL 401(k). For years, traditional 401(k) retirement plans, another form of tax-deferred savings, were limited to employees, often with an employer match as a savings incentive. Many owner-operators have 401(k)s begun while they were company drivers or in previous careers. Since tax law changed in 2001, however, individuals have been free to set up solo 401(k)s, which have an annual contribution limit of up to 25 percent of income or $17,500, whichever is lower, in 2013, as long as you are classified as an employee of your own business and are paying yourself a salary. If you're self-employed, the rules are more complicated. See IRS publication 560's rate table and worksheets for determining your contribution limits. ROTH 401(k). A newer retirement plan option is a combination of the Roth IRA and the solo 401(k) called, appropriately enough, the Roth 401(k): Money you put into it is taxed in the year you earned it, but never again. Many financial advisers believe a Roth 401(k) is by far the best deal for an owner-operator. Assuming that taxes will go up in the long term is the safest of bets, so paying now locks in the lower rate. Also, the more taxes you can pay now while you're younger, the better. Midlife expenses such as young children, a monthly mortgage and that growing business all make great write-offs to lower your tax bill. 8/28/13 1:18 PM 8/28/13 3:30 PM 8/28/13 6:10 PM