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Investing/Strategies / Retirement Investing
|Subject: Re: SEP v. 401k||Date: 8/25/1998 11:22 AM|
|Author: TMFPixy||Number: 5163 of 73985|
Greetings, Brad, and welcome. You asked:
I am self-employed. I converted my traditional ira to a Roth ira in 1997. I want to be able to save more $$ and I am unsure if a sep-ira or a 401k is the better method (or possibly something else I'm not aware of).
How can I establish either? Is it possible to have both? What is the maximum annual contribution to each?
Administratively a SEP is far simpler and cheaper to operate as a self-employed person than a 401k. Additionally, it will allow you more latitude and discretion in the amount of contributions from your net compensation each year.
The usual plans for a self-employed person are the SEP, SIMPLE or Keogh. You can read a brief description of each as well as the 401k in my Foolish Retirement Plan Primer at http://www.fool.com/Retirement/Retirement.htm .
For further details, you should also get and read IRS Publication 560, Retirement Plans for Small Business, available at http://www.irs.ustreas.gov/prod/forms_pubs/index.html .
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