You need to decide where you want to maintain the plan, a brokerage firm or a bank are the usual places. Most all of them have prototype plans & you simply fill out an adoption agreement & you're off & running.

Do you have any employees?

If not, you might want to consider an "Individual 401-K Plan". Again, there are prototype plans available, more likely from a brokerage firm; the main advantage is that with a 401-K, you can borrow from the plan assets down the road if you need to do that without creating a tax liability.

Are you an employee of the bank?

Are you covered under a retirement plan or 401-K there?

You can't avoid that.

Are you completely self employed?

There are plenty of banks around, as well as brokerage firms.

You need to answer my questions.............

Right, ok

So, some of your social security may be taxed, now.

It all depends upon what your adjusted gross income is;

OK, I understand

Approximately how much do you think you'll earn in 2012?

Yes

I heard you the first time

But all these questions revolve around how much you earn

I understand; how much do you expect to gross in self-employment income?

As I said, most banks or all brokerage houses have prototype plans

Fidelity has a good reputation;

You need to decide what you want to invest in;

You realize a SEP is an IRA, right? It just has higher contribution limits.

If you tell me what you expect your gross income from your self-employment is, as well as your monthly social security check, I can tell you want I think you should do,

sure if you have sufficient income

OK

Well, here's what you should do before you do anything;

OK, sorry to hear that; I didn't know if you were male or female

Believe it or not, because you are self-employed and are earning that amount of money, you have a

fairly complicated return; not to us, but it will seem that way to you;

At least 50% of your social security will be taxable; so you'll have $8,000. of income to be taxed without getting any more money

I got female with the widow

You will be able to shelter some of your taxable income with a larger retirement plan contribution, but the plan you choose must be co-ordinated with your existing IRA

Deductions for health insurance are handled differently when you are self employed

Plus several other things will be different

Before you do anything, you should sit down with a local CPA, bring in your last year's return & the information for this year re your self-employment income, social security, medicare premiums, supplemental health insurance premiums; prescription drug premiums if you have that.

You need to get an estimate of your 2012 taxes & determine your retirement plan funding options & you should be making estimated payments or you will be penalized at the end of the year;

We can't do that here in this forum for obvious reasons; we don't have all the data for one thing;

You already missed 2 estimated payments; so this is something you need to get squared away or you won't be a happy camper next April,

As an example, your initial question was how do I set up a SEP? I answered that, but as you can see it leads to more important matters that need to be addressed first.

You have plenty of time to make retirement plan contributions

don't worry about that until you can figure out what the contribution's tax saving will be;

You'll be lucky if it saves you 20% at the most

So it doesn't wipe everything out;

The part about the 8,000. of additional income from part of your social security being taxed, will probably add $1,500 to your tax bill for that item alone

It is a killer; I know, because I have the same problem

If you have any more questions later on, you can always come back here & ask for me. Just put Steve G. at the beginning of your question.

Please remember to rate me so that I can get credit for my answers.

Thanks very much.

You are welcome.

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