If you make $100,000 a year and put $20,000 into a qualified retirement
plan, the government will deduct the 20k from your income and tax you
on 80k (100-20=80). So you pay less tax and set aside some money. If
you owed 25% tax on 100,000 ($25,000), you would now owe only 25% of
$80,000 ($20,000). So you we able to put $20000 into a retirement fund
and pay $5000 less in taxes.

This is known as a 401k plan, a deductable IRA, and there are other
account types (like Keogh, 403b) which do similar things, but I am not
familiar enough to speak of. A qualified accountant should be familiar
with most or all of these.

One key to deductable plans is many of them have "maximum"
contributions, in addition many of these plans have withdraw rules (how
to take money out). In any plan you are suggested, I would ask
a) how does money go in?
b) what is money invested in?
c) how can money be withdrawn?
d) what are the maximum contributions (each year) and maximum withdraws
(each year).
e) what happens to money if you die with money still in account?

a deductable IRA has a $4000 contribution limit
a 401k has a $15000 constribution limit
both have similar withdraw rules, an IRA is much easier to set up than
a 401k.
not all IRA's are deductable (there are deductable IRAs, non deductable
IRAs and Roth IRAs, among others). To compare these plans, compare
contribution limits, contribution rules and withdraw rules. There are
tax implications for all of these plans too.

And I have just given you the tip of the iceberg. Hopefully you can
ask some questions now.

He means your 401k plan at work. It takes pretax dollars and stashes them in
a tax differed account.

The other thing could be an IRA account, either traditional or Roth. The
difference is when you pay your taxes.

There are lots of sites on the web for information, but first ask your HR
department about any plans offered at your job.

Good luck.

"mike" <mike111111_2001spammenot[at]yahoo.com> wrote in message
news:3-WdnfKa09DMNvfeUSdV9g[at]ptd.net...
- quote -

In article <3-WdnfKa09DMNvfeUSdV9g[at]ptd.net> ,
"mike" <mike111111_2001spammenot[at]yahoo.com> wrote:

- quote -

Mike...it is a Keogh Plan. You can google it to learn a bit more.
These were very popular years ago with folks who owned businesses
that were incorporated. Today, there are many alternatives, from
small 401K plans, SEP plans, Simple plans, and investing on your
own in IRA's and Roths.

In simple terms, considering the tax advantage, for every dollar
you put in today, the government will put in 30 cents. The reason
is that you are investing pre-tax.

This is one of the 2 biggest tax avoidance methods that are
available to small business owners, and you simply don't want
to miss out. In even simpler terms, you either put money away
for retirement, or you give that money to the government. Wouldn't
you rather have it for yourself?

See what your accountant has to say. I'd get a 2nd opinion because
an accountant who is pushing a Keogh seems like they might be just
a big out of date.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

could someone please help me with retirement investing. Im only 30 and
havent put a dime towards retirement yet. But my accountant who does my
taxes keeps yelling at me that i should put money in a retirement plan or
kyoui. (probably spelled that wrong) This way i can deduct that amount off
of my taxes.

I dont understand what he means by that. So if i go to the bank tommorow
and put $20,000 in a kyoui, i get to deduct that off of my income when i do
my taxes next year? I am self employed by the way.

any info would be much appreciated.

thanks

mike