Self-employed need advice

[arozo]

Hello everyone! I recently joined this forum and I am delighted to know that I can finally get some advice. My husband owns his own business(resturant business LLC). We do not have a 401 K or IRA. It is my understanding that most people contribute to their 401 K and their employer contributes a percentage. What kinds of options are open to self-employed people? I want to contribute money in some kind of account and get a tax break. Any advice?

[Daylily]

It's fairly easy to start a SEP-IRA which is what we do.
I think you can also do a Simple.

[Hypersion]

You can invest are much are you want in a taxable account.

With GB tax cut taxable account are oftein better than 401K/IRA.

[sweeps]

With GB tax cut taxable account are oftein better than 401K/IRA.

Huh? Please explain.

OP, check into either a SEP IRA or an Individual 401k. These allow you to stash a lot of your income away for retirement.

[scfr]

arozo - Read IRS Publication 560 (Retirement Plans for Small Business). It will explain SEP, SIMPLE, and Qualified plans. You can get tax breaks on all of them, but which one is best for you will depend on your situation.

You can see this publication at:
Publication 560 (2006), Retirement Plans for Small Business

Unfortunately, it is for 2006, but there is a section called "what's new for 2007."

[Hypersion]

Huh? Please explain.

OP, check into either a SEP IRA or an Individual 401k. These allow you to stash a lot of your income away for retirement.

401K/IRA are taxed as ordinary income while capitol gains and dividends are taxed much lower.

[sweeps]

401K/IRA are taxed as ordinary income while capitol gains and dividends are taxed much lower.

Not according to this analysis. Also the favorable treatment of capital gains and dividends tax may go away in the near future.

EDIT: I was responding to the previous comment, by the way, that investing in a taxable account is often better than a pre-tax retirement account. I think it works out better in a few circumstances, but not often.

[arozo]

Thank you for your advice I will research the links you gave.