Self-employed workers—even those who are self-employed just part-time—have far more ways to save for retirement than traditional employees. And, while it may not be necessary to get acquainted with every single option, the three best—the Roth, the SEP, and the Solo 401(k) —are worth learning about. 

Each has at least one unique benefit that could prove pivotal in a pinch. Here’s a snapshot of how these plans work, what makes them unique and who they’re best for.

Roth IRA

Contribution limits: $6,000 annually (plus $1,000, if you’re over 50)

Summary: Contributions are not deductible, but both principal and earnings can be withdrawn tax-free at retirement. 

Unique benefit: You can tap equity in this account prior to retirement without tax or penalty, which can help you deal with financial emergencies that can’t be addressed another way. 

Let’s say, for example, that you contribute $5,000 annually to a Roth for 10 years and earn an average annual return of 10%. (This is the average annual return of big-company stocks since 1926, according to Morningstar.) But then, you get in a car accident and are unable to work for six months. 

Without a massive stockpile of emergency savings, you’d be hard-pressed to pay both the medical bills and the mortgage. What do you do? You can tap up to $50,000 of the $85,352 that should now be in your Roth IRA.

Those withdrawals will not be subject to tax or penalty because you are simply taking out your contributions, not investment earnings. If, however, you tap the remaining $35,352 prior to retirement, you will owe both taxes and penalties on that amount.

If you earn more than $122,000 when single or $193,000 when married, your ability to contribute to a Roth is restricted, however. Once you earn more than $137,000 (single) or $203,000 (married) the ability to contribute to a Roth is taken away completely.

Who it’s best for: The young and financially insecure. The younger you are, the more value you’ll get from future tax-free withdrawals. And, you’ll sleep better at night knowing that you can get at your contributions in a pinch.

SEP IRA

Contribution limits: 25% of your business income, or $56,000 for 2019, whichever is less.

Summary: SEP is short for Simplified Employee Pension, but it works much like a traditional Individual Retirement Account. You deduct your contributions in the year that they’re made and the money that accrues in the account is not taxed until it is withdrawn at retirement. 

If your business cleared $100,000, you could save $44,000 in a Solo 401(k)—about 44% of your income.

If you withdraw money from the account before retirement age, the full withdrawal is subject to both income taxes and penalties. At retirement age, withdrawals are subject to income tax at your ordinary tax rate.

Unique benefit: You can make 2018 contributions in 2019, right up to your tax-filing deadline. That makes the SEP the perfect retirement plan for those who need a last-minute tax deduction. (The maximum contribution for 2018 is $55,000—$1,000 less than the maximum for 2019.)

Who it’s best for: Those with substantial self-employment income and few deductions, who are certain they won’t need to use this savings before retirement.

Solo 401k

Contribution limits: $19,000 plus up to 25% of self-employment income to a combined total of $56,000 in 2019.

Summary: Solo 401(k) plans are a little more complicated to set up because they are subject to many of the rules that apply to corporate 401(k) plans, including annual reporting. Contributions are tax deductible in the year that they’re made. The money that accrues inside the account isn’t taxed until it is withdraw at retirement.

Unique benefit: There are two benefits unique to these accounts. One is that you can make contributions as both “employee” and “employer,” which could allow you to contribute a higher percentage of your income.

In other words, as an “employee” of your own enterprise, you can contribute $19,000 this year. Then, you can put on your business-owner hat and contribute another 25%.

So, if your business cleared $100,000, that would allow you to save $44,000—about 44% of your income. That’s the $19,000 that you contributed as an employee, plus the $25,000 (25%) that you contributed as your employer.

The other unique benefit of a Solo 401(k) is that it can allow plan loans. This gives you the ability to temporarily tap retirement funds without tax or penalty, as long as you repay the money within a set period. The ability to borrow from the plan, however, must be set out in plan documents in advance, which is one of the reasons these plans are more complex to establish. 

Who it’s best for: People in high tax brackets, who want to save an unusually large percentage of their income.

This story originally appeared on © SideHusl.com

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