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Harprulz asks:

Is there a longevity requirement that must be met before one is eligible to open a SIMPLE acct? Since I have just begun my contracting job, I only expect to make about $3500 this year. It seems like from reading about this type of account that I need to have one or two years work history and I need to make at least $5000 to be eligible.

You are correct that you must have earned at least $5,000 through self-employment in the preceding calendar year to open a SIMPLE. In that sense, then, there is a work history requirement for the SIMPLE.

Also, am I correct in assuming that since I'm not making a lot of money, that I would be able to invest more in a SIMPLE than I could in a SEP?

Yes, you are correct. With a SIMPLE, you may contribute up to 3% of pay as the employER and up to 100% of your net compensation not to exceed $6,500 this year. With a SEP, you are limited to 15% of net compensation, which is about 13.04% of gross compensation. For lower self-employed incomes, that means the SIMPLE allows a greater contribution.

Last question: am reading info from TIAA-CREF and I am not sure which fund is comparable to the Vanguard S&P 500 Index fund. They refer to these funds as "a variable annuity account..." and that has me a little worried. Are these mutual funds or are they annuities?

Yes, that's what you're looking at. However, IMHO TIAA-CREF offers some of the best annuities in the nation.


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