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I'm starting a retirement plan for my business in 2000. There will be three participants in the plan - myself and 2 full time employees. I found a third party administrator (a CPA specializing in retirement plans) who is setting up a Safe-Harbor 401K - requires a minimum 3% employer contribution (up to 15%) and allows up to 15% employee contribution ($10,500 maximum). This type of plan worked best in my situation.

The best part, though, is that the money can be invested any way I want. Initially, I will be investing the contributions as one collective "lump" in a business account at E*Trade. When all the participants have enough contributed to meet the $1000 account minimum, then the money will be distributed into 3 self-directed accounts.

The Safe-Harbor 401K was the best plan for my situation - get some advice as to what type of plan would work best for you. The cost was $1000 to set up the plan, and it will run $1500 a year for the record keeping and tax filing. That cost seemed reasonable to me, and it lets me have virtually unlimited investment options. Stay away from banks and insurance companies. I dont know about you, but I'm already paying my bank and insurance companies more than I care to.
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