Posted on August 11, 2005 at 16:48:33:
Retirement options for the self-employed keep getting better and better. The Keogh plan was a great improvement over an ordinary IRA; the defined-benefit Keogh let independent contractors and entrepreneurs stash away even more each year. A SEP-IRA can be easy to set up, with a more flexible deadline. And now the individual 401(k) offers still more benefits.
Like the other retirement plans, an individual 401(k) lets the self-employed individual invest pretax dollars, reaping tax-deferred growth. But contribution limits are higher and it is possible to borrow against the account. The account owner (it’s best for one-man operations) can put away up to 100 percent of the first $14,000 of income, then 25 percent of total income, up to a maximum of $42,000 ($46,000 for those 50 or older).
Before setting up an individual 401(k), check out investment options and fees. Get some expert opinions.