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Your Small Business Retirement Plans

BOSTON (CBS) - If you are smart enough to start your own business, you should be smart enough to start a retirement plan as well! Here are some ideas to get your retirement savings started.

IRAs. You can contribute up to $5,500 this year and if you are over 50 you can use the catch-up provision and put away an additional $1,000.

Let's say your net income for this year is $30,000. You can shelter up to $5,500 of it by contributing to an IRA.

SEP-IRAs:  Simplified Employee Pension Plan uses an IRA format. You can contribute up to 25% of compensation up to $51,000 for this year. Now if you choose a SEP-IRA and have employees you will need to contribute to their SEP-IRAs also.

Let's use $30,000 again and you would be able to contribute $7,500 to your SEP. Easy to set up with a mutual fund company or a brokerage company. Contributions can be made with your tax return next year.

SIMPLE-IRAs: Savings Incentive Match Plan for Employees was designed for small businesses with under 100 employees. But it is useful for the self-employed as well. Here you are both the employee and the employer. You can contribute up to 100% of compensation up to $12,000 for this year and if you are over the magic age of 50 an extra $2,500.

As the employer you will have to match the employee's contributions usually up to 3%. So if you are self-employed and have a net income of $30,000 this year you could possibly put away as much $11,845. SIMPLEs must be set up by October 1st if you want to use the plan this year.

401(K)'S For The Self-Employed:  You can contribute up to $17,500 with a catch-up provision of $5,500. So with that same $30,000 income here you could contribute up to $17,500 this year. $23,000 if you are over 50.

One more thing:  Plan on doing something. You can always do something different next year.  But do put some money away for retirement.

Using $30,000 of net income as our basis depending on which you plan you set up you could legally shelter over half of your income ($17,500) for the year.

IRA:                 $5,500
SEP-IRA:        $7,500
SIMPLE:        $11,845
401(k):           $17,500

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