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Subject: Re: One of us without an IRA Date: 5/12/2005 1:14 AM
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https://flagship5.vanguard.com/VGApp/hnw/content/AccountServ/SBS/ATSSBSOVContent.jsp

This page at Vanguard will also walk you through the various retirement plans available to the self-employed. I ended up going with a SEP IRA. That way, for every $100 that I pay myself, the business can contribute $25 to the SEP. The contributions are deducted as business expenses. Keep in mind that you must offer the plan to employees who have been with you for three years out of the last five, I think.

So if your business profits $30,000, you can pay yourself a mere $24,000 and then send the remaining $6,000 (which amounts to 25% of what you were paid) to the SEP. Then you can still contribute $4000 to your Roth this year. That's a total of $10,000 you can contribute to IRAs.

If you don't have a lot of assets and don't want to pay lots of fees, Vanguard has some of the lowest fees in the business. They also have some funds called "Target Retirement" funds that are actually combinations of other funds. Each Target fund has a certain allocation of US stocks vs International stocks vs bonds, so you can invest in as little as one fund and still have decent diversification. Other fund families such as Fidelity offer the same type of product, I believe.
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