Self-employed LRCers: SEP-IRA Recommendations?

Vanguard. They might require a $1000 minimum, though. They are a very good choice because their low fees become a much bigger factor over 30 or 40 years of compounding. Put it in the S&P 500, or a target fund, or the STAR fund of funds.

drbop wrote:

Vanguard. They might require a $1000 minimum, though. They are a very good choice because their low fees become a much bigger factor over 30 or 40 years of compounding. Put it in the S&P 500, or a target fund, or the STAR fund of funds.

Yeah, that seems like a no-brainer, with essentially no fee. I'm just curious if anyone else has another rec for any reason.

Also, does anyone have a good calculator for determining optimum contribution amounts for lowering AGI/Taxable income after all my deductions/credits are calculated?

Bump for any other thoughts/input

Vanguard!

Three Six Oh wrote:

drbop wrote:

Vanguard. They might require a $1000 minimum, though. They are a very good choice because their low fees become a much bigger factor over 30 or 40 years of compounding. Put it in the S&P 500, or a target fund, or the STAR fund of funds.

Yeah, that seems like a no-brainer, with essentially no fee. I'm just curious if anyone else has another rec for any reason.

Also, does anyone have a good calculator for determining optimum contribution amounts for lowering AGI/Taxable income after all my deductions/credits are calculated?

Schwab would be fine as well.

I see conflicting questions- are you just putting in $500 or are you trying to maximize contributions?

SEPs are 100% employer funded, generally capped at about 20% of your net income. So if you want to maximize and contribute monthly, estimate 20% of your full year NET income (or perhaps a bit less to be conservative) and divide by 12. You can make any additional contributions to get it exact when you prepare and file your taxes for the prior year.

I assume that you have no employees. if you want a bigger contribution ceiling, then switch to a solo-401(k). The solo k will give you about the same cap on employer contributions that the SEP Provided, but with the additional amount that you can also find as an employee. Not a good plan if you plan on hiring.

Consult with Flagpole to see if he will manage your money for you.

kingojamin wrote:

Consult with Flagpole to see if he will manage your money for you.

He’s too busy investigating Trump’s Russia collusion. Oh, that’s right it turned out to be a Democratic hoax. So perhaps he would be willing to take on the little extra work.

As another poster mentioned, if saving more $$ in tax advantaged accounts is your goal, go with a solo 401k instead of a SEP.

I have a solo 401K at Vanguard and it's a very smooth process.

I hated Vanguard when I had my 401K with them. It could have just been my employer plan had crappy options. I now have everything in Fidelity and am very happy there. Basically no restrictions to my options whether I want stock, mutuals funds by fidelity, or others.

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If you're the only employee for your business then a SEP IRA at Vanguard will allow you to invest in Vanguard mutual funds, non-Vanguard mutual funds, individual stocks, etfs, ect..

If you have other employees or hire in the future, then the SEP may only hold Vanguard mutual funds.

i401(k)'s have the advantage of being able to defer up to $19,500 if under 50 from your salary, and this portion could be invested as a Roth contribution as well if you want that. At Vanguard, the i401(k)'s can only hold Vanguard mutual funds. Also, i401(k)'s at Vanguard don't allow you to roll pre-tax money from IRA's into it, which you might consider doing if you ever needed to do the backdoor Roth conversion to get money into a Roth IRA without taxes on the conversion.

i401(k) is probably better option if you're okay with a little bit more tax filing, not being able to access the money quite as easily as you can with a SEP IRA, and if you're not hiring in the future.

Also initial fund minimums (either $1000 or $3000) are waived for Vanguard i401(k).

Vanguard has the lowest fees in the industry, though Schwab is competitive. I used to have a Fidelity plan but the fees were way out of line with the above two (in a bad way).

If you stick with basic index funds (definitely a good plan) you can put together a nice simple portfolio with management fees around ~0.05%. E.g. You could do worse than a mix of 70% VTSAX (total US stock market fund) and 30% VBTLX (total US bond fund).

I would however go with a Solo 401k rather than a SEP IRA. I've set up a couple 401(k) plans over the years with Vanguard, and the process is pretty straight forward. The solo 401(k) allows you to contribute $19K annually without restriction, and up to $57K if your income is in the $220K ballpark. I can't think of a situation where you'd be better off with the SEP IRA these days.

That is definitely just lazy fund selection on the employer's part. Vanguard offers a very wide selection of funds, but employers (who aren't investment experts typically) usually only offer a small subset. When you administer your own 401k you can easily add new mutual fund options to your plan at no cost (I've done this). If you're not happy with the funds your employer offers, it doesn't hurt to ask them to add a fund or two of your choosing - they might actually say yes.