One of my tax issues in 2008 is that I’ve had some self-employment income and needed to select a retirement vehicle that would permit me to make significant tax-deductible contributions now without locking myself in to large commitments in future years. [Yes, dear reader, I do have income (unless it's "phantom", where one receives no cash but has to recognize taxable income--but I digress), and I know your tears are crocodilian.]
Creating a defined benefit pension plan would allow me to make the largest contribution and take the largest deduction for 2008, but it wasn’t clear that future SE income would be reliably steady. So I opened a self-employed 401(k) last week and partially funded it on the last day of the year.
One problem solved. © 2009 Stephen Yuen
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