8. If you are Self-employed you can open a SEP-IRA in addition to the $5000 (6k if you are over 50) in your Roth/IRA. This year you can save up to $49,000 in a SEP-IRA. It just has to be 1099 income.
If you receive a 1099 form at tax time you are eligible for a SEP-IRA. In addition to your Roth IRA and 401k/403b you can sock away 100% of your 1099 income up to $49,000. Otherwise they are treated as ordinary IRAs, Funds can be invested the same way as any other IRA just with a different wrapper. Contribution to your SEP-IRA will lower your taxable income that year. Qualified withdrawals at age 59.5 or older will be taxed as ordinary income. You are in control of contributions and can change the amount saved at will. You can use the same discount online brokerage as your Roth/IRA.
My take on the SEP-IRA is that it's a great tool to those of you that have some 1099 income. As long as you are maxing out your personal Roth/IRA and are at least putting in the minimum amount to get the full match in your401k/403b. (Assuming you have one). It may seem easier to just put more in your 401k/403b but the higher fees associated with my 401k/403b make it my last choice when it comes to tax shelters. Don't get me wrong. The 401k/403b are great tools for retirement savings but they are the most expensive of the three tax shelters discussed.
Tax shelters ranked by efficiency and fees
1st - Company matched 401k/403b (No match? move on to 2nd choice)
2nd - Personal Roth/IRA at discount brokerage
3rd - SEP-IRA
4th - Additional 401k/403b (Not matched)
If you maxed out all of these you could save $71,000 a year for retirement! There are other types of shelters to consider (Muni's, real estate, Health care) but work with these 3 first.
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