Self Employed Baby Boomers' New Retirement Plan

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Thousands of self-employed baby boomers will soon sign on to the new Solo-DB plan. With contribution limits that can exceed $160,000 per year, the Solo-DB may prove especially popular among the 6 million or so self-employed baby boomers.

Thousands of self-employed baby boomers will soon begin switching to the Solo-DB plan, a newly created “one person” version of the traditional defined benefit pension plan, predicts Lamaute Capital, Inc.

With contribution limits that can exceed $160,000 per year, the Solo-DB may prove especially popular among the 6 million or so self-employed baby boomers.

“A lot of baby boomers age 45 to 54, many of whom are in dual income families, are moving thru the last phase of their peak earning years”, says retirement specialist Daniel Lamaute. “This may be their last chance, before they begin to retire in 2010, to sock away substantial sums into their retirement nest egg. And, when it comes to maximum tax-deductible contributions, nothing beats the Solo-DB” says Lamaute.

“For example, a 52 year old physician who earns $180,000 from a private practice in addition to her regular wages could put away most of her self-employment income in a Solo-DB retirement account. For 2004, she could put up to $155,350 of her business income into a Solo-DB, and in the process save $54,372 in current income taxes (assuming a combined federal and state marginal rate of 35%)”, according to Lamaute.

The Solo DB plan is designed for business owners with no employees, unless the employees are partners in the business or the spouses of the owners. With a Solo-DB plan you set a target dollar benefit that you want to receive when you retire. An actuary calculates your required annual contributions to the plan based on your target benefit, age, income, planned retirement age, and how much you have in the plan.

“Most self-employed business owners do not have enough disposable income to take advantage of the Solo-DB” says Lamaute. “For them other retirement plans such as the SEP, and Keogh plans with maximum limits of $41,000 or the Solo-401(k) with a limit of $44,000 for 2004, are less expensive and more flexible alternatives.”

“But for those boomers who want to maximize their tax deductions and retirement savings, and who have the ability to maintain high levels of contributions for a period of five years or more, the Solo-DB plan is worth looking into” says Lamaute.

Lamaute Capital, Inc. is an 11-year-old brokerage firm specializing in retirement investments. To learn more about the Solo 401(k) or Solo DB plans, or to request a free information kit, visit http://www.InvestSafe.com.

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