Opening A Simplified Employee Pension Plan (sep) To Lower The Taxes

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It sometime gets annoying to prepare the annual tax forms. But, now you can open a simplified employee pension plan (SEP) to lower your taxes. By putting money into a SEP retirement account, you can lower the taxes by about $1,500!!

As you might have heard about SEPs, but you couldn't open one because of full-time job provides a 401(k) plan. However, it turns out for those who own a side business, it doesn't matter that your primary employer has a 401(k) plan.

All year you have been beating yourself over not maxing out your 401(k). As you don't want to lower your 401k contributions, so you try to built up a sizable emergency fund. With this you feel more secure in your job situation, so you can pull money out of your emergency fund to fund a Simplified Employee Pension Plan.

What is a Simplified Employee Pension Plan?

A SEP is a retirement account for the self-employed or small business owners. It works very much like a traditional IRA where the contributions are tax deductible. The money in the SEP IRA is then taxed on withdrawal.

Advantages of a SEP IRA:

1. Allows small business owners much higher contribution limits than traditional IRAs - 25% of net income, with a cap for 2010 of $49,000

2. Allows small business owners to create simplified pensions for their employees.

3. You can contribute to a SEP any time of the year, including up to April 15 of the next tax year.

4. You can open a SEP IRA at almost any bank, mutual fund company or brokerage firm.

5. You can open a SEP IRA even if your primary employer has a 401k.

Start a Side Business

You can plan to start a side business alon with your jobs. There are so many benefits. Now you find out that a SEP IRA is just own more benefit.

Over the last three years, people have been building an online business in their part-time after work. This side business has been awesome for all. Now it is allowing you to open a SEP IRA and save even more money on your taxes.

So, having a side business id beneficial as, SEP IRA might be a great retirement account to lower your tax liability.

A SEP IRA is super easy to open - it takes about an hour. You can consider various SEP IRA like, Vanguard SEP, Fidelity SEP or a SEP through your bank.

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About the Author:
Author writes regularly about investment and finance topics. To know more about How to Get out of Debt, Reduce Credit Card Debt, Wachovia Online Banking Services, pay off debt, Pay off Credit Debt visit - http://loanstogetoutofdebt.wordpress.com/



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