No. of Recommendations: 1
One more thing, DH does NOT have to set up a separate company to have a SEP IRA. He only has to have income from self-employment. He can even talk to the custodian of his existing IRA and add the SEP funds to the same account, after doing some paperwork to convert his existing IRA to a SEP. In the SEP he has more choices of options.
The $2800 figure for taxes not paid as an employee isn't real--because he can have a SEP, and also because the income going into the 401k is tax deferred, not tax free. You have to pay the tax later, when hopefully the tax rate paid will be less.

I'd still go for Option #1 because of the health insurance.

Best wishes, Chris
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