Hi,

When you are an employee of a business, the amount you can contribute to a retirement plan is based on the retirement plan maintained by the business. The same holds true for partners in the practice too.

Otherwise, the partners would put a modest retirement plan in place for the employees of the practice, and then would sock away a ton of money based on their partnership draw. The government tends to frown on arrangements like those.

If you weren't covered under a retirement plan this year, you might be able to make a deductible contribution to an IRA, depending on your marital status, your income, and some other factors.

Zip Code: 01801

Thank you for the reply!

Well I wasn't covered under any plan this past year as a partner or as an employee. My entrance date for the profit sharing plan was Jan 1st 2010. I have a personal IRA which i already maxed out at 5000. but I really want to put away more than that.

I am single. I made about 260k last year. How can I put away more?

Zip Code: 02115

That's great you're trying to put away as much as possible for your retirement.

Unfortunately, if you don't have access to a retirement plan at work, maxing out your IRA is the only other pre-tax retirement savings opportunity available to you if you have no self-employment income.

Why not take the money you were going to use for this retirement savings, and invest within a taxable account, pay down some debts, or (dare I say) invest in a low-cost variable annuity available through Vanguard or Fidelity. With these annuities, you put in after-tax money, but the money grows tax-deferred, and will be available to supplement your retirement income when you retire.

Keep saving, since chances are good your income will be going down while your taxes will go up.

Zip Code: 01801

Another option would be a purchase cash value life insurance policy.

While you are single, at some point, you may have a family and will "need" the coverage.

Using life insurance can allow you to lock into lower premiums based on your age today, provide additional disability protection, asset protection (depending upon your state) as well as give you income tax-free access to monies in the future when your tax bracket may even be higher than it is now.

You don't even have to wait until age 59.5 to avoid a penalty for early withdrawal.

Zip Code: 11797

Thank you again for your thoughts.
You suggest good alternatives.

One more question before I can put this SEP thing to rest. I was also advised that I could possibly set up a SEP under a protype SEP or individual SEP (as opposed to using the standard 5305 form). I tried looking into this but I cant find anything official about whether or not I would qualify for such a thing. Is this possible with my situation?

Again, i'm was an employee for 8 months, and a partner for 4 months, but not eligible for the partnerships profit sharing plan.

Zip Code: 02115