Wow, looks like you're really trying to get a jump on your retirement savings.

Great question. Prior to 2001, Keoghs allowed for larger contributions than SEPs. While you could contribute 13% of your net self-employment income into a SEP, you could contribute up to 20% of your net self-employment income into a Keogh - as long as you set up a plan that combined a Profit Sharing Plan with a Money Purchase Plan.

Well, in 2001, everything changed when the 2001 Tax Act increased the allowable SEP contribution to 20%. So now, you don't need to worry about the paperwork and filing requirements that go along with a Keogh Plan, and you can still contribute 20% of your income into a pre-tax retirement plan.

That's why I say that these days, self-employed individuals with no staff will set up either a SIMPLE IRA, SEP IRA, or Solo 401k.

Finally, another benefit of a SEP is that you have until the due date of your tax return, including extensions, to set it up. To contribute to a Keogh for 2007, you would have needed to have established the play prior to 12/31/07.

Zip Code: cpa@mdtaxes.com

Hi,

I just want to make sure you have my correct e-mail address for the
2007 tax forms. Please send me the pdf files as soon as possible - I
need them for my daughter's college applications.

Thank you,

Ivan Sever
isever@berklee.edu

Zip Code: 02492

Sol, read this http://www.mdtaxes.com/news0706.html