Author Topic: Should I invest in taxble account or SEP IRA (after roth iras)?  (Read 1372 times)

pbc561

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Glad to be a part of this site, as this is my first post on the forums.

My question is in regards to what type of account should I invest in after I have maxed out my roth IRA. I only have self-employment income, so I'm limited to the self employment IRAs or taxable accounts. I have a pretty big tax bill this year, so I don't know if I want to put it in something like a SEP IRA to use as a deduction or just pay the tax and throw what I have left in a taxable mutual fund. I do want to be able to retire early and live off investments, which is what scares me about the Sep IRA. What should I do? Would I regret the amount of capital gains I'd pay or the lack of tax-deffered growth if I went the taxable route?

Thanks for your help.

pbc561
« Last Edit: March 09, 2015, 09:55:39 PM by pbc561 »

DavidAnnArbor

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Re: Should I invest in taxble account or SEP IRA (after roth iras)?
« Reply #1 on: March 09, 2015, 10:05:47 PM »
I'm self employed too and I prefer a solo or individual 401(k) over a sep ira, because you can put in so much more money tax deferred into that individual 401 (k). The 401 (k) requires you to be a sole employee to yourself, but could include a spouse.
Problem is you had to have opened the individual 401(k) by dec. 31st in order to make contributions for the 2014 tax return. So for 2014 go with the sep ira. But then open an individual 401(k) for 2015.
Regarding wanting to retire early there are ways of getting access to tax deferred money by transferring some of the money into a Roth IRA, it's called a roth ladder. You still do have to have 5 years of living expenses in a taxable account before the roth ladder would be able to be accessed. I recommend doing a google search, mrmoneymustache.com: roth ladder

Also here's more information:

http://www.madfientist.com/traditional-ira-vs-roth-ira/


http://jlcollinsnh.com/2013/12/05/stocks-part-xx-early-retirement-withdrawal-strategies-and-roth-conversion-ladders-from-a-mad-fientist/ 

georgec

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Re: Should I invest in taxble account or SEP IRA (after roth iras)?
« Reply #2 on: November 05, 2015, 06:04:44 PM »
I to am in the same situation, I've been maxing out my Roth IRA and adding to my SEP, but after discovering MMM I got to wondering if I should be investing in some taxable accounts too. I'm a long way from maxing out my SEP each year, so good to know I can just increase those savings. Looking forward to reading over those links. Thanks.