Simplified Employee Pensions

• Simplified employee pension plans, also known as SEPS, are simple to establish and maintain.
  
  As of 2010, SEPs allow you to contribute and deduct up to 20 percent of your self-employed income and up to 25 percent of your salary if you are an employee of your own corporation. You can annually contribute as much as the maximum contribution which is $49,000 as of 2010, or zero. It is entirely up to you.
  
  You can establish an SEP as late as the extended due date of your income tax return. There are no phaseout limits, annual government reporting, or ongoing administrative expenses.
  
  

Keogh Profit-Sharing Plans

• Keogh profit-sharing plans are based on a 20 percent contribution of your self-employment income with a $49,000 limit as of 2010. There are no phaseout limits.
  
  You must draft a document of your Keogh profit-sharing retirement plan in the first year that it is established. This generally costs around $200 as of 2010. You will be required to submit an annual report to the IRS.
  
  

Keogh Defined-Pension Plans

• You must open your account before the end of the fiscal year to qualify for a deduction in the same year. Once established, you can make contributions for the preceding year as late as the extended due date of your annual income tax return.
  
  Your contribution must be professionally assessed annually by an actuary. You are obligated to contribute the annual sum determined by the actuary. You can contribute as much as $195,000 annually.
  
  

Solo 401k

• You must establish your 401k by Dec. 31 of the calendar year in order to claim a tax deduction within the same fiscal year.
  
  You are allowed to contribute up to 100 percent of the first $16,500 of your annual self-employed income as of 2010. If you are over 50 years of age, you can contribute as much as $22,000 annually.
  
  

Roth IRAs

• Roth IRA contributions are nondeductible. Your advantage with this plan is that your contributed earnings are allowed to accrue tax-free. When you decide to cash out, you will not owe any income tax.
  
  Your are allowed to make an annual $5,000 contribution. If married, you can jointly make a contribution of $10,000. Individuals over the age of 50 can contribute an additional $1,000 annually.
  
  Your Roth IRA is subject to a phaseout between an adjusted gross income of $105,000 for singles and $120,000 for couples as of 2010.
  
  

Spousal Deductible IRA

• You may contribute $5,000 annually to a spousal deductible IRA if your joint adjusted gross income (AGI) is under $167,000 annually (as of 2010).