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Author: rgr29 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: What's beyond SEP-IRAs ?? Date: 4/30/2001 11:46 PM
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I recently left a government job to start my own sole-proprietor consulting practice. At the job, I had a 457 plan where I was able to max out my contribution to the $8K ceiling per year. (In 2001, it's been moved up to $8.5K/year.)

I have opened a SEP-IRA for 2001. To be able to contribute the same amount of $8.5K per year, would require me to have a net income of about $65,000. This is because there is an effective limit of 13.04% of net earnings as the ceiling to contribute to a SEP-IRA.

As I'm not sure if I will get to this amount of net earnings, are there any other retirement vehicles I could use to defer money from taxes until retirement?

(My wife and I already max out on the $2K/each allowable on Roth-IRAs. We own a home and after a few refinances, are very comfortable with an effective 30-year fixed mortgage rate of 6.25%. I am NOT interested in tax-sheltered annuitites because I have yet to hear a good thing about them.)

Any suggestions would be appreciated.
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 29404 of 76418
Subject: Re: What's beyond SEP-IRAs ?? Date: 5/1/2001 6:20 AM
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Greetings, rgr29, and welcome. You wrote:

I have opened a SEP-IRA for 2001. To be able to contribute the same amount of $8.5K per year, would require me to have a net income of about $65,000. This is because there is an effective limit of 13.04% of net earnings as the ceiling to contribute to a SEP-IRA.

As I'm not sure if I will get to this amount of net earnings, are there any other retirement vehicles I could use to defer money from taxes until retirement?

(My wife and I already max out on the $2K/each allowable on Roth-IRAs. We own a home and after a few refinances, are very comfortable with an effective 30-year fixed mortgage rate of 6.25%. I am NOT interested in tax-sheltered annuitites because I have yet to hear a good thing about them.)


Because you have a SEP-IRA in place, your other options to provide for tax-deferred earnings (not necessarily contributions) are an IRA, and/or an annuity. You're already using Roth IRAs, and you don't wish to pursue an annuity. Thus, all that's left is a regular taxable investment account.

For an overview of possible tax-deferred retirement plans you could use, see my Foolish Retirement Plan primer at http://www.fool.com/Retirement/RetirementPlanPrimer.htm .

Regards..Pixy




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