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Subject:  Re: A Confused New Investor Date:  1/16/1999  3:05 PM
Author:  TMFPixy Number:  7883 of 103780

Greetings, ThomasThorn, and welcome. You wrote:

<<I own my own business and had a great year. Our business is fairly new so this is the first year we actually created income above and beyond living expenses. Toward the end of last year our accountant recommended we make a contribution to a retirement plan through a SEP. At that point he recommended to us a local investment company. Apparently our story is complicated by the fact that my partner and myself and our employees are paid through a staff leasing service. My partner and myself actually only receive a small percentage of our compensation through the leasing company. The investment sales-person indicates we are somewhat restricted in our investment selections due the fact that we are leased employees. He said that we were able to do a SEP but it had to be through Kemper. He recommended a mutual fund that appeared to be very expensive and had performed well below the market. At this point we are very confused and have lost trust in the financial advisor we are dealing with. We have not given him any money! After reading your books and other information your provide I feel like we would ideally like to make our own decisions about where to invest; however, we are unsure where to turn to make sure our investments qualify under a SEP, and how to even establish the SEP. My partner and myself were fortunate to have six figure incomes in 1998. We have three employees to which we will also be making a retirement contribution. How should we best address this confusing situation?>>

Your agent recommends Kemper because that's what he sells. You can set up a SEP with a whole host of brokers and funds. I suggest that first you read IRS Publication 560, Retirement Plans for Small Business (SEP, SIMPLE and Keogh Plans) available for download at . You can also get a good overview of all three in my Foolish Retirement Plan Primer at . After you've done that, just do some shopping for the trustee you wish to use. You (and your employees for that matter) are free to use any custodian/trustee you wish, and doing so will give you the freedom of investment choice you are seeking.


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