Posted on September 18, 2002 at 16:20:10:
The self-employed and small business owners—those with fewer than 100 employees—can sock away more retirement cash, thanks to last year’s tax bills. They even get help setting up their plans.
The easy part: there’s a tax credit of up to $55 to cover the cost of establishing a plan.
New Keogh limits let the self-employed put away as much as $40,000 on a profit-sharing plan. Previously, the total was lower and required a paired profit-sharing and more-demanding money-purchase plan. Keoghs must be set up by December 31.
Easiest of the tax-sheltered retirement accounts is a Simple IRA, in which one can stash $7,000 this year, $7,500 for the over-50 set. By 2005 this will rise to $11,500. Note, that employee contributions must be matched up to 3 percent. A SEP-IRA also permits much higher limits now, 25 percent of compensation, up from the previous 15 percent.