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Author: dharmadollars Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76237  
Subject: Re: SEP vs SIMPLE, etc Date: 4/29/1999 9:02 AM
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Re: Keogh plans: The most widely used configuration is with a MP funded at 10% and a Profit Sharing with a max funding level of 15%. Reason? Once established the Money Purchase portion is not optional. If you don't or can't meet the funding you have to shut down the plan. With the 10% figure instead of the 20% max, you keep your mandatory funding at the lowest level to achieve maximum funding (combined 25% of compensation to a dollar max of $30,000). This keep the other 15% (Profit Sharing max) in the discretionary category. You can decide each year how much or little to put into this bucket.

A SIMPLE IRA might be a better alternative if you generate very low taxable earnings. You can contribute up to $6,000 as your own "employee" regardless of what % of your income that is. You then also match a portion of that with other dollars.
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