Retirement Investing For The Independent Contractor

    April 9, 2003

Hi Ulli,
Thanks for offering your knowledge to help WebProNews readers out! Here’s my question:
I work for a small family owned company. Although I have worked here for over a year and work a 40 hour week, I am not hired as an “employee” because they can’t afford to offer me any sort of benefits yet. I am an “independent contractor” for them and file my taxes as such. Because of this, I do not have a 401K and need to start investing for my future in ways other then my savings account! My salary is 55K per year. What are my options and what do you suggest? Thanks for your help!


Hi Jill,
If you are a self employed person, which you are as an independent contractor, and file a Schedule “C” on your tax return you can set up a Sep-IRA. I have a lot of clients with small businesses that are not incorporated and use this as a tool to build up a retirement account. The rules are that everyone with Self-Employment (SE) income can contribute up to 20% after SE tax deduction up to a maximum contribution of $40,000 per year. To find out the exact amount you can contribute you will have to check with your tax preparer.


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Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped hundreds of people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit:

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