Since most voiceover artists are self-employed, they usually don’t have a retirement account from their employer. Some people think of this as a disadvantage, but it’s only one if you allow it to be. Actually, there are many retirement plans for voiceover artists. The best ones to look into are:
- SEP IRA
- SIMPLE IRA
The SEP IRA is a traditional IRA for individuals who are self-employed. The SEP means Simplified Employee Pension. All of the money you put into the account is tax-deductible, which can be nice when tax season rolls around.
What you should know about the SEP IRA is that the money in the account is only taxed when you withdraw. This can end up costing you a lot of money, which is something many people don’t like about it.
The SEP IRA is much like a Roth IRA. The only difference is that in 2016, business owners can deposit either 25% of their income or $53,000.
The SIMPLE (Savings Incentive Match Plan for Employees) IRA is another option for retirement. You can only contribute $12,500 per year if you’re under 50 years of age and $15,500 per year if you’re older than 50.
If you need to withdraw money from this retirement account within two years of starting it, you’ll be penalized 25%. This is much more than the 10% penalty you’ll get if you withdraw from a SEP IRA early.
This is the perfect retirement account if you want to build up your savings quickly, but don’t have a lot of money to put towards it. Your limit to contribute is either 53% of your income or $53,000, whichever is less.
If you need to take money out of your 401(k), you can take out a loan on it and pay it back within five years. While this may give you piece of mind, it’s not recommended since this is the savings for your retirement.
Most self-employed individuals choose the SEP IRA because of the flexibility in contributions. To decide on which one you should choose, it’s best to speak to an accountant who is familiar with your current financial standing.
It’s important to have an emergency fund saved up before starting on your retirement account. If you don’t have one, you may end up having to take money from your IRA or 401(k), which could end up hurting you financially in retirement.
It’s also important to save enough money to put towards your retirement savings. This may mean you need to budget to ensure you have enough to put towards all of your other expenses.
As a voiceover artist, you work hard for your money. Use it to help you live a good life now and many years into the future with the best retirement account for you.