While most entrepreneurs and self-employed contractors, such as freelancers, give up regular paychecks and employer-sponsored health insurance plans, many still want and need the security of a retirement investment plan. For regular employees, some of these types of plans are matched by employer contributions, or even complemented by pension plans. Freelancers and contract employees must figure out the best options for their own personal situations when it comes to retirement. Fortunately, self-employed workers can take advantage of several types of retirement investment options, including self-employed 401(k) plans and Roth IRAs. Below, we'll take a look at both types of accounts to help you decide which might be better for you.

What self-employed 401(k)s do for you
In the past, 401(k) plans were employer-sponsored only. However, in the modern workplace, entrepreneurs, small business owners and contractors can have these types of retirement plans. For 2015, self-employed investors can contribute up to $18,000 in a self-employed 401(k) to protect income from tax. Self-employed business owners or entrepreneurs who are at least 50 years old can invest up to $24,000 per year without having to pay taxes on contributions. Freelancers who earn money via profit shares can invest up to 25%, as long as it's under $53,000 altogether, of their earnings in 2015.

Besides the obvious advantages of not having to pay taxes on contributions to a 401(k) plan, as long as the contributions don't exceed the cap amounts, there are many other benefits of these self-employed retirement plans. For example, most plans do not have any annual or setup fees. Also, unincorporated self-employed workers, such as a freelance writer who works on his own, may deduct his 401(k) contributions from his annual personal income when doing his taxes. This means that he'll typically owe less to the Internal Revenue Service at the end of the fiscal year. Self-employed business owners who are incorporated can typically deduct their contributions under the business expenses category.

How a Roth IRA can help you
Along with having a 401(k) plan, the self-employed contractor or small business owner can set up a Roth IRA, or individual retirement account. The difference between a 401(k) and a Roth IRA is that Roth IRA contributions are not tax deductible. These types of plans do have earning restrictions – the self-employed must look at their overall modified adjusted gross income (MAGI) amounts to ensure they do not earn too much to qualify for this type of retirement plan. In 2015, freelancers who earn equal to or less than $131,000 per year, and who file as head of household, single or file separately from their spouses, qualify. Contractors who file joint tax returns that are equal to or less than $193,000, are also eligible to contribute at least some money to a Roth IRA. The contribution cap for Roth IRAs for 2015 is $5,500 for workers under age 50 and $6,500 for those who are 50 and older.

One of the main benefits of Roth IRA plans is that you can contribute to them at any age. For example, entrepreneurs who are age 70 or older can no longer add to their 401(k) or traditional IRA. Many freelancers do not retire at the traditional age, so not having a contribution age limit can be advantageous. Another benefit is that the freelancer or contractor doesn't have to pay taxes on Roth IRA withdrawals after he reaches age 59 1/2. If there is money left in the Roth IRA when the contractor dies, the person who inherits it doesn't have to pay taxes on it either.

In the end, many self-employed workers will be able to do both self-employed 401(k) plans and Roth IRAs if they so choose. For those seeking to set aside as much as possible, the self-employed 401(k) plan has the greatest potential for immediate tax savings.