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Conventional wisdom says fund the Roth if you expect to be in a higher tax bracket in retirement, fund the SEP and regular IRA if you expect to be in a lower tax bracket. Of course, who knows what the tax brackets will be when we retire, right?

Personally, I fund my SEP first. I am a firm believer of a bird in the hand, when it comes to the gov't and taxes. I'll take my deduction now, thank you very much. I have no confidence that Roths will remain tax-free and Congress won't go messing that up too. And this is despite the fact that I have good reason to believe that our income will be much higher in retirement than it is now.

On the other hand, I think most people believe that taxes will only go up, and therefore choose the Roth now for it's tax-free status later.

It really depends on what you're most comfortable with. Have you run the numbers to see how much of a tax break you'd get today by opening a SEP? That might make a difference in the decision.

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