No. of Recommendations: 0
I'm self employeed and looking to start a IRA/SEP/ETC this year. I'm looking for guidence on which is best for me. I've reviewed the Fool online section on IRAs. I've tried searching various places on the Internet (including fool.com), but have not had much luck.

I'm looking for pointers and guidence on both the TAX implications as well as the long term investment implications.

Thanks!
Print the post Back To Top
No. of Recommendations: 0
Greetings, RollinW, and welcome. You asked:

<<I'm self employeed and looking to start a IRA/SEP/ETC this year. I'm looking for guidence on which is best for me. I've reviewed the Fool online section on IRAs. I've tried searching various places on the Internet (including fool.com), but have not had much luck.

I'm looking for pointers and guidence on both the TAX implications as well as the long term investment implications.>>


You can read a brief overview of SEPs, Keoghs and SIMPLEs in my Foolish Retirement Plan Primer at http://www.fool.com/retirement. You should also download a copy of IRS Publication 560, Retirement Plans for Small Business (SEP, Keogh and SIMPLE Plans), which is available at www.irs.gov.

Of the three, the SEP is the easiest and cheapest to administer, but the Keogh has the potential of allowing the largest contributions. The Keogh is also the most costly to administer, particularly if you ever have employees. These points are highlighted in the primer.

Regards..Pixy
Print the post Back To Top
No. of Recommendations: 0
RollinW Date: 4/29/99 1:07 AM Number: 10224
I'm self employeed and looking to start a IRA/SEP/ETC this year. ... I'm looking for pointers and guidence on both the TAX implications as well as the long term investment implications.

There is excellent information on the Tax Strategies Board - both in the message base and in the web pages associated with it. To the best of my knowledge, a Keogh Money Purchase Plan allows the largest amount of tax deferred savings (20% of Schedule C profit). It's usually combined with a Keogh Profit Sharing Plan for greater flexibility. Lots of information about these on Tax Strategies.
Print the post Back To Top
No. of Recommendations: 0
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.
Print the post Back To Top
Advertisement