Pensions for Indies

Hi!

I'm a bookkeeper off Long Island, NY. Work 1099 several jobs and also on the books for 2 other companies.

I have come into some money. I know I can pay into an IRA and I have up until tax due date 4/15 to put money in from the previous year. My question is: Does the IRA have to be set up in the year you are claiming?

Thanks for any help.
Dana


Hello Dana,

Of all the retirement plans available to indies -- and there's many!! -- the only two that may be opened for the previous year are IRAs and SEPs. All other must be opened by December 31 or earlier.

You may open and contribute to a 2007 IRA -- traditional or ROTH -- until April 15, 2008.

You may open and contribute to a 2007 SEP up to the filing deadline for your 2007 tax return. That could be as late as October 15, 2008. SEP stands for "simplified employee pension." Don't let the name confuse you. It's for the self-employed and you may contribute up to 20% of your net self-employed income.

-- June