UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev | Next
Author: mwyattea Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 79717  
Subject: Re: SEP IRA AND 401K Date: 5/11/2001 10:18 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Pay attention to the new tax bill as one feature may allow you to dramatically increase your contribution based on your self-employment income (BTW, Pixy is correct that you can maintain another plan based on your self-employment income. The only time that this can get dicey is if you have ownership in your employer - probably not your case).

The new provision that I'm talking about is the increase in the defined contribution 415 limit from the lesser of 25% of Compensation to 100% of Compensation. I think that instead of a SEP-IRA you may need to move to a qualified plan; however, I'm assuming you're young with no employees of your outside business, so you could get away with a standardized prototype document from a brokerage house. Why would this change be significant to you?

Assume 20,000 Net Income (let's ignore the SET deduction for the time being for simplicity's sake). Under current law, the best you could do would be $4,000 contribution (25% of the 20,000 less the contribution of 4,000). Under the proposed new law in effect for next year, you could do $10,000 contribution. This would entail moving to a money purchase plan which represents a fixed commitment each year (not a discretionary contribution) but if you're looking to shelter alot of your self-employment income you should keep this in mind.
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev | Next


The Retire Early Home Page
Discussion on accelerating retirement day.
Post of the Day:
Macro Economics

Looking at Oil and Gas
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.