One of my 2011 goals was to start a SEP IRA with my 2010 freelance income. As of today, ladies and gentlemen, I’ve met that goal with resounding success! 
I didn’t fund a SEP IRA earlier because I wasn’t sure how much I made in freelance income for 2010, and I didn’t want to accidentally over-contribute. After I finally got all my tax papers, I got to work. Luckily, my tax software had a “maximize it” option for retirement vehicles available to freelancers. So, I just plugged in my 1099 gross wages and expenses, and the software calculated for me my maximum contribution based on the income. My SEP IRA contribution came out to be a little higher than $1,000 – certainly nothing that will grow to keep me in luxury when I’m old, but every little bit helps. By this time next year I hope I will be able to plump up the account a little bit more.
If you have freelance or self-employment income, and you are looking for a way to shield some of that income from taxes and save towards your retirement, SEP IRAs would be a great option. You have until April 18th (tax filing deadline) to set up and fund a SEP IRA, and there is almost no paperwork involved. I knew the plan was supposed to be one of the easiest plans to establish, and even then I was surprised at how simple the process was.
Most institutions and low-cost providers, such as Fidelity, Vanguard, and Charles Schwab, offer the SEP IRA.
If you haven’t started on your taxes yet… I will have a great giveaway sponsored by H&R Block slated for Monday. Have a great weekend!
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Thanks for the reminder, although I have not made any money yet!
Congrats! I made some money in 2010 freelancing on the side as well… but it all went to my debt snowball. Maybe this year?
Nice job! I was wondering if you would be able to make this goal, based on your earlier blogs!
Congrats! That's a huge accomplishment! I know because when I was freelancing I kept meaning to set up a SEP IRA and never got around to it…
Thanks! I am glad you are back to blogging.. missed your writing there.
What does 'SEP' stand for? Self-employed?
SEP IRA = Simplified Employee Pension Individual Retirement Account. A mouthful, isn't it?
Thanks for the heads up on the SEP IRA. I have freelance income but never gave this a thought. Its a way of making some of the money "permanent".
The only downside to the SEP is that you can't put away much unless you make a lot of freelance income, but I figured even a little bit is worth it. I've found that I am much more "loose" with my freelance income and often fritter it away on luxuries, so like you said, a SEP IRA helps me really SAVE some of this money I earn during my nights and weekends!