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Greetings, Jeb, and welcome. You wrote:

<<I have a question that seem very simple, but can't seem to find and answer to. Also, my account gave me some information, but I'm wondering if he understood what I was asking.

Currently I am employed as a contractor through a placement agency. However since my rates are very high (software engineer) I don't qualify for their 401k plan (they rate me in a special category - who knows). Now every year I open a IRA(Roth), but I wonder if their is a self-employed replacement for 401k. Last year my accountant had me open a IRA-SEP, but this year he said I can have either the traditional IRA or the IRA-SEP. Is this correct. Or is there a self employed 401k? (say the 403?).>>


If you are considered self-employed, then there are a number of options for a tax-deferred retirement plan for yourself. These include a SEP-IRA, SIMPLE or Keogh plan. You will find a brief description of each in our Foolish Retirement Plan Primer at http://www.fool.com/Retirement/Retirement.htm. They are described in more detail in IRS Publication 560 (Retirement Plans for Small Business) available for download at http://www.irs.ustreas.gov/prod/forms_pubs/index.html. All allow a potentially greater contribution than an ordinary IRA.

If you use one of those, then you will be (at leased based on what you indicated you earn) ineligible for a deductible contribution to a traditional IRA, but you may still make a nondeductible contribution. If you can meet the adjusted gross limits for a Roth IRA, then based on a nondeductible contribution that would almost certainly be better for you than the traditional IRA due to your ability to ultimately get the earnings tax-free in retirement.

Regards,,Pixy
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