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A SEP IRA has broad appeal due to its high annual contribution limits, completely discretionary and flexible annual contributions and minimal administration. SEP IRA plans can be established by a one person business or by a business owner with employees.When a SEP IRA is established for a unincorporated business such as a sole proprietorship, annual contributions are made into your SEP IRA account between 0 to 20% of your net adjusted self employment income (or net adjusted business profits). SEP contributions are flexible and the percentage of contribution can be changed at any time and may be skipped in a bad year. SEP IRA contributions are generally 100% tax deductible from personal income.
Generally a SEP must be established and funded by your tax filing deadline. Generally, filing extensions extends the period for establishing and funding the SEP plan. For a sole proprietor April 15th would be the deadline to establish and fund a SEP for the prior tax year. If an extension was filed a sole proprietor can establish and fund a SEP IRA by October 15th.You said you wanted to take advantage of a tax deduction but there are many different options for you and investing in a retirement account. Here is a link to a very good primer on the different types of retirement options an dtheir tax benefitshttp://www.smartmoney.com/retirement/planning/an-ira-primer-7957/the information is just too vast to include in a message.Before you decide speak with your personal tax advisor to make sure all your information is known.