Which plan is best for VERY SMALL business?

[Guest heike]

Hi All!

I need some help with my retirement planning. (Time is running short)

For the last years I have always contributed the max to my roth ira, but would like to save some more in tax deferred plans.

With my house cleaning (4 - 5K per year income minus expenses) internet sales ( 1 K per year), does it make sens to have a SEP or SIMPLE plan?

How much would I be able to contribute? 25% of profit from each business, or a total amount per year? How do I start up a plan for myselve? Does it even make sense to have one, or is the cost more than it's worth?

[Belgarath]

There's not enough information in your post to provide a really good answer, but it appears that a SIMPLE might be your best option.

I'd look at IRS publication 560 if I were in your shoes, which will answer most of your questions.

[Bird]

I agree. With a SIMPLE IRA, you can shelter up to 100% of your income, up to the $10,000 limit (plus $2,500 catchup if over age 50). There's small required employer contribution too; 2% or 3% depending on how you set up the plan.