Q. I am starting a new position as an independent contractor. My former employer had a 401(k). I want to continue to save for retirement, but I’m not sure how to do it without that 401(k). How can an independent contractor continue to save for retirement?

A. Good news! There are many advantages of being self-employed when it comes to saving for retirement. As an independent contractor (ie, paid on a 1099 instead of a W-2), you are considered to be running your own business. Just like your employer gets to pick the benefits it offers, you now get to choose (and pay for) your own benefits. While you will no longer get a 401(k) match from the employer, you are also no longer limited by the employer’s contribution limits, plan fees, or often poor investment options.

The mainstay of retirement saving for an independent contractor should be an individual 401(k), sometimes called a solo 401(k). These plans allow you to make an $18,500 “employee” contribution ($24,500 if older than age 50) and then make “employer” contributions of 20 percent of your net income up to the plan contribution limit of $55,000. While you only get one employee contribution no matter how many jobs or 401(k)s you have, the $55,000 limit is a per-plan limit. That means if you have an employee job with a 401(k) and do some work as an independent contractor, you can still open an individual 401(k) and just contribute the employer contribution to it.

Solid individual 401(k) plans can be easily opened at any of the large mutual fund or brokerage companies such as Vanguard, Fidelity, Charles Schwab, eTrade, or TD Ameritrade. While all of these plans are good plans with diversified, low-cost investments available, some plans offer features that others do not. For example, Vanguard doesn’t allow IRAs to be rolled into their plan. Fidelity and Charles Schwab don’t offer a Roth 401(k) option. eTrade and TD Ameritrade charge (admittedly low) commissions to buy and sell many mutual funds and exchange-traded funds.

Be sure the plan you choose has the features you need, such as Roth contributions, IRA rollovers, or 401(k) loans. You will also need to get an Employee Identification Number from the IRS to open an individual 401(k), but this is free and only takes a few minutes online. You do not need to form an LLC or corporation to use an individual 401(k). By virtue of receiving a 1099, you are automatically a sole proprietor, and that is enough to start a plan.

Some doctors, and even their accountants, consider using the slightly simpler SEP-IRA instead, which has the same $55,000 total contribution limit. However, thanks to the employee contribution feature of an individual 401(k), you can hit the maximum contribution of $55,000 with a much lower income. In addition, using the 401(k) instead of a SEP-IRA allows you to do a backdoor Roth IRA since the balance of a SEP-IRA is included in the required pro-rata calculation (explained below) but the balance of a 401(k) is not.

Whether you are employed or self-employed, you can also contribute to a personal backdoor (indirect) Roth IRA and, if married and you have sufficient income, a spousal backdoor Roth IRA. These became permitted in 2010 when Congress began allowing high-earners to do Roth conversions. Instead of a direct Roth IRA contribution, you first contribute to a traditional IRA, which is not deductible due to your high income, and then move that money to a Roth IRA.

Since you never received a deduction, there is no tax cost for the conversion, and the end effect is the same as if you had contributed directly to a Roth IRA. Annual contribution limits are $5,500 if younger than age 50 and $6,500 if older than age 50. Be aware that due to the pro-rata rule, the conversion is only tax-free if you have no balance in a SEP-IRA, SIMPLE IRA, or traditional IRA on Dec. 31 of the year of the conversion. If you do have one of those accounts, you may wish to roll it into a 401(k), such as your new individual 401(k), to facilitate future backdoor Roth IRAs.

A health savings account (HSA) can also function as a stealth IRA and is an excellent account to use for retirement savings. Not only does it give you an upfront tax break and tax-protected growth like a 401(k), it also provides for tax-free withdrawals if the money is used for health care. This makes it the most tax-advantaged account available to the investor. These funds can be invested in mutual funds like a typical retirement account. The contribution limit for 2018 is $3,450 for individuals and $6,900 for families. If you end up not needing it for health care, you can withdraw the money penalty-free after age 65. However, you would need to pay taxes on that withdrawal, just like a 401(k).

Another option for independent contractors, although more rarely used, is a personal defined benefit/cash balance plan. This retirement account is best thought of as an extra IRA masquerading as a pension. It has higher expenses than an individual 401(k) due to a requirement for annual actuarial calculations and typically is not invested as aggressively. However, the contribution limits can be quite high, particularly for physicians in their 50s or 60s. It is an option worth exploring for someone interested in saving large amounts for retirement.

Investing in a nonqualified, taxable brokerage or mutual fund account for retirement is also an option. While the tax and asset protection benefits are much more limited, the additional flexibility can be a useful feature. Alternative investments, such as real estate, are also much easier to invest in outside of retirement accounts.

As you can see, an independent contractor has plenty of excellent options to use for retirement savings. While the main pillar should be an individual 401(k), a Roth IRA, HSA, cash balance plan, and taxable account provide additional options.