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Author: dweiss3 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 756955  
Subject: New Individual 401(k) Plan Date: 9/24/2001 8:24 AM
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I recently came across an article about a quirk of the new tax law that will allow a self employed individual to have a 401(k) plan with a higher contribution limit than previously. The link to the original article is:

http://webreprints.djreprints.com/00000000000000000023032001.html

I have also included a link to information on the Pioneer Investment Management web site about their Uni-K product that takes advantage of this change:

http://www.pioneerfunds.com/misc/pdfs/10594-00-0801%20Uni-K%20Fact%20Sh.pdf

I am planning to retire from NASA in February, 2002. My intention was to work as a contractor to NASA (part time) for three more years until my wife retires. However, with this tax law change, would I be better off setting up a small business with me as the sole employee, working as a subcontractor, rather than accept a postion as an employee of a large company that does contract work for NASA? That way I would be subject to the contribution limit described in the article, rather than the $11,000 limit that would apply to the contractor's corporate 401(k) plan.

I will not really need the $ I will earn during those three years for living expenses and I would like to maximize the amount I can put into a tax deferred vehicle. This Uni-K sounds like just the ticket.

What are the implications of setting up a sole proprietorship? I would appreciate any advice or insight the board can provide. Thanks.

Dave Weiss
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