Tax Strategies: Other Retirement Plans

Simplified Employee Pension Plans (SEPs) are attractive to small businesses because they have less cumbersome reporting rules and lower administrative expenses than maintaining a qualified plan. Employer-funded SEPs allow the employer to make tax-deductible contributions into each eligible employee's SEP IRA. For 2008, the maximum contribution cannot exceed 25% of compensation (up to a maximum of $230,000 for 2008) or $46,000, whichever is less. This plan must be established and funded prior to your company's tax-filing deadline, including extensions. You may also contribute (within the annual limit) to a traditional and/or Roth IRA.