Last time, we looked at the IRA as a possible way to start retirement planning when self-employed. Today we will look at another option: the self-employed 401(k). The self-employed 401(k) is one of those options that many people are not aware of, mainly because it seems as though the 401(k) is something only offered when you work for "The Man."

The great thing about the self-employed 401(k) is that it is fairly straightforward and easy to set up. However, it is important that you realize that this is different from setting up a 401(k) for employees. That does get complicated. But for the self-employed 401(k), when you are just doing it for yourself, it is not very difficult. And you get some advantages over the IRA.

As we know, the limit for the IRA is $4,000 per year. The 401(k) limit is significantly higher ($15,500 starting this tax year) per year, so you can put much more in. And there are no income restrictions. However, even though your money grows tax free, and it can be taken out pre-tax, it is taxed when you withdraw it. I wouldn’t recommend this option to replace a Roth IRA (keep that going as well), but it could be to your benefit to roll your traditional IRA into a self-employed 401(k).