If you underestimated your withholding or just want to reduce Uncle Sam's share of your income, you might want to consider starting up a plan before your tax filing deadline. Here's a summary of three of the most popular plans for small businesses. All three offer tax deferred retirement savings and tax deductible contributions. Each year, the business owner decides how much to contribute for herself and each employee. Only the employer may contribute to a SEP-IRA .
Contributions are tax deductible as ordinary business expenses.
Unlike traditional retirement plans, there are no special IRS pension reporting requirements. SEP-IRAs are relatively easy and are the least expensive of these three alternatives. Keough Keough plans are designed for self-employed workers or partners in small businesses. They can be structured as a Money Purchase or Profit Sharing arrangements. The Profit Sharing approach allows a variable contribution which can be redetermined each year.